First Native TLOS Covered Call Successfully Completed

We’re excited to share that the first batch of Telos Covered Calls was successfully completed. Approximately ~300,000 wrapped Telos were loaned through a covered call strategy with a tenor of 30 days and a 110% strike level. This allowed the Telos treasury to generate over ~$10,200 in USDC upfront premium (~6.8% premium per notional, or ~82% annualized).

Total Assets in the Telos Treasury Vault at MYSO: Originally loaned wTLOS plus USDC upfront Premium.

The overall ~300,000 wrapped Telos notional was split across three transactions with ~200,000 wTLOS, ~42,800 wTLOS, and ~62,000 wTLOS (see our earlier post). Since the 110% strike level wasn’t reached, all wTLOS tokens were returned, and the treasury now, in addition to the starting wTLOS amount, holds ~$10,200 in USDC stables. This goes to show how treasuries can actively contribute to ecosystem growth by taking advantage of structured products, growing network adoption, while also generating cash revenue for the community and diversifying into stablecoins over time.

Telos Covered Call: ~300,000 wTLOS loaned across 3x transactions, each with 30d Tenor and 110% Strike Level.

Covered Call Outperforms Buy-and-Hold

Below is a plot showing the wTLOS price over time for the ~200,000 wTLOS covered call. The black line shows the TLOS price, and the blue line shows the TLOS covered call performance.

Buy-and-Hold vs. TLOS Covered Call with 30 Days tenor and 110% Strike.

One can see that it has been advantageous for the treasury to underwrite this covered call as the blue line (shifted upwards by the upfront premium that was earned) strictly outperformed a buy-and-hold strategy (black line). Note that the break-even price (green dotted line) was never crossed in this instance.

But also, in the case where the covered call would’ve converted, this nonetheless can be a beneficial outcome for the treasury as it can serve as a mechanism to diversify into stables over time without causing immediate sell pressure and while saving on trading fees. Simultaneously, any upfront fees are earned right at the inception of the covered call, allowing teams and treasuries to capitalize on their treasury token inventory especially in market times of high volatility. Note higher volatility leads to higher option premiums one can generate, and with TLOS volatility currently standing relatively high, there remain very attractive yield opportunities when using this strategy (see attached indicative quotes below).

TLOS Covered Call Indicative Premiums per Notional across various Tenor and Strike Combinations.

Note that bespoke covered calls are available to any larger TLOS token holder, not just the treasury. In case you too would like to take advantage of this yield opportunity, please reach out to us on the MYSO discord or via email hi@myso.finance.

Also, make sure to join our upcoming community call on Friday where we will be joined by Telos to discuss the latest developments. We look forward to continuing our collaboration with Telos and following up with additional covered call transactions very soon.