Here are 3 reasons why you should be bidding on option vaults
The options market is a multi-trillion behemoth and has been an integral part of traditional finance since the 1900’s.
These derivatives, when executed correctly, can offer superior risk-adjusted returns payoff that exceeds your vanilla buy and hold. However, option strategies are highly complex, and not everyone has the resources to get involved and profit handsomely from it.
Enter Decentralized Option Vaults (DOVs).
DOVs automate option strategies for depositors, who are then rewarded with sustainable, non-inflationary yield on their crypto assets.
While the benefits for depositors have often been written about, few know the opportunities that buyers of these options have.
Here are 3 reasons why you should be bidding on option vaults.
Arbitrage
Option markets have relatively thin liquidity compared to large crypto spot assets. Given the liquidity and relatively few trading venues that exist, price is not necessarily efficient.
Buyers can take advantage of the inefficiency and arbitrage purchased vault options using the various option CEXs or DEXs that exist.
There have been cases where risk-free arbitrage of >30% is possible using this method.
Hedging Long Tail Assets
DOVs have introduced a whole slew of previously illiquid option markets. For market participants looking to hedge downside or maintain a delta neutral portfolio made up of long tail assets, options are a new tool for them to accomplish this goal.
Gamma YOLO
Admittedly a self-derived term, the gamma YOLO refers to a vault option buyer buying options in the hopes of them expiring in the money (essentially, mini crypto lottery tickets) from week to week.
A step-by-step guide on how to bid on vaults
Historically, the role of a vault option buyer has been reserved for market makers and institutions, but we have a completely open vault bidding system.
Not only can users deposit into the vaults to sell volatility, anyone can play the role of a market maker and buy the options to profit from arbitrage, hedging or YOLO-ing some gamma.
While the step-by-step walkthrough can be found here, here’s a TL;DR:
- Follow @PsyOptions to be alerted when vault auctions are live every week. Vault auctions generally run every Friday at 0900 UTC. However, this is subject to change.
- Visit https://euros.psyoptions.io/ when auctions are live.
- Find options you’re interested in and bid!
A final word
If you’re an interested trader or institution that has any questions about the vault bidding process, don’t hesitate to reach out to us on any of the socials below.
Happy bidding, and remember: be the bid you want to see in the world.
The PsyDAO team
Site: https://psyfi.io
Twitter: https://twitter.com/PsyOptions
Discord: https://discord.gg/f3BwCZZP7J
Let’s be friends!
Hi, my name is Nazri and I am a core contributor at PsyOptions.
Find me on Twitter: https://twitter.com/nzrnrdn
Find me on Instagram: https://instagram.com/nzrnrdn
