yieldharbour
@yieldharbour
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Decentralized options trading. Coming soon to Kujira 🛠️
Joined September 2023
Don't wanna be here?
Send us removal request.
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We are excited to announce that Yield Harbour has officially submitted a governance proposal to initiate the deployment process to Kujira mainnet. This proposal seeks to deploy the Price History contract, which will record on-chain asset prices every 30 minutes.
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Want to be among the first to explore our Yield Harbour on testnet?
DM if you're interested! $KUJI
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Help us let the entire
#CosmosEcosystem
know that
@TeamKujira
will be the best place to trade options.
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Imagine a call option like a concert ticket reservation. You pay a small fee now to reserve the right to buy a ticket at today's price, even if prices soar later. In options trading, if the stock price climbs, you can buy at the lower locked-in price.
#DeFi
$ATOM $KUJI
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It's not rocket science - $KUJI community is second-to-none.
Glad to be here building amoungst the best.
GM ☕️
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Cash-settled DeFi Options: Provide something like $KUJI as collateral and receive premiums in $USK. A practical way to generate income, hedge investments, and access speculative opportunities in the DeFi market.
#DeFi
#CosmosEcosystem
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Options vs. Perpetuals
Options have a set expiry date, defining strategy timelines with risk limited to the premium paid.
Perpetuals lack expiry, offer infinite holding with costs adjusted by a funding rate, aligning prices much closer to spot.
#options
$KUJI
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Thales of Miletus, an ancient Greek philosopher, made one of the first recorded options trades with olive presses.
Here we are in 2024 with tokenized options. $KUJI
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We will do an official poll soon, but If you could only pick one - which asset would you like an options market for? $KUJI
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Who remembers what is was like when we weren't at ATH's?
🏗️🛠️📉
$KUJI
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Deep-in-the-money options exhibit slower theta decay as expiration nears, contrary to out-of-the-money options where theta decay accelerates. This difference is due to the intrinsic value inherent in deep ITM options, which influences their time decay curve.
$KUJI $ATOM $INJ
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Options trading is perceived as complex due to its intricate terminology and the sophisticated strategies that involve understanding and applying concepts such as "the Greeks".
Our mission is to make trading options more accessible than ever
#Options
$KUJI
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Buy a call option on a stock priced at $100 with a strike price of $105 for a $5 premium. Instead of buying 100 shares for $10,000, you control the same amount of shares with $500 (100 options x $5). If the stock rises to $115, your option is worth $10 per share, a gain of 100%.
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Derivatives are financial contracts whose value is derived from an underlying asset. Options are a type of derivative that give the buyer the right, but not obligation, to buy or sell the underlying asset at a predetermined price within a set timeframe. $KUJI
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Put options are like insurance for your stocks. Just as you insure your car against accidents, buying a put option can protect your stock investment against a market crash. You pay a premium for peace of mind, limiting potential losses.
#optionstrade
#Investing
$INJ $KUJI
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The accelerated time decay of options near expiration stems from their value composition: intrinsic and extrinsic values. The intrinsic value reflects the in-the-money (ITM) part, while extrinsic value encompasses time value and implied volatility (IV).
$KUJI
#OptionsTrading
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The Chicago Board Options Exchange (CBOE) was the first to formalize options trading in 1973, revolutionizing the financial markets by introducing a regulated platform for options.
#DeFi
technologies will lead the next innovation in options trading. $KUJI
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Tokenizing Options:
Options typically correspond to 100 shares of the underlying asset. In DeFi, the tokenization of options enables a 1-for-1 representation, facilitating precision and accessibility in options trading with a more granular approach.
#DeFi
#OptionsTrading
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Volatility is key in options trading: it's intuitively understood as price fluctuations. Higher volatility typically correlates with higher option premiums, as the potential for profit increases. $INJ $KUJI
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Expecting high volatility?
A straddle strategy involves buying both a call and a put option on the same asset with identical strike prices and expiration dates, aiming to profit from significant price movements in either direction.
#options
$KUJI
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Importantly, this contract will also be freely available for use by the entire Kujira community, providing a valuable source of reliable historical price data for other projects and developers.
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Higher volatility generally leads to higher option prices, as there is a greater chance of the option finishing in-the-money (i.e., profitable) at expiration.
How do you think this will play out for $KUJI options?
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Market Makers in Options: Traditional finance uses centralized entities for liquidity. DeFi's shift to smart contracts offers transparency but requires educating investors on how these decentralized markets operate. $ATOM $KUJI
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The successful deployment of the Price History contract marks a key milestone towards bringing Yield Harbour's innovative decentralized options platform to mainnet.
Let's continue building the future of decentralized finance together!
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Volatility (V) vs. Implied Volatility (IV):
V tracks asset price fluctuations historically, providing a snapshot of past market movements. IV forecasts future volatility, offering insights into market expectations. Both are key metrics used in Options trading. $KUJI
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What happens if you buy both a call and a put option on the same asset with the same strike price and expiry date?
This strategy allows you to profit from a large price move in either direction, The minimum cost is the premium paid if the price stays relatively flat.
#DeFi
$KUJI
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You can discuss all things Yield Harbour in the official
@TeamKujira
discord -
$KUJI $ATOM
#CosmosEcosystem
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This deployment will be the first of 4 infrastructure contracts that will be deployed before an options market is deployed. More information about these contracts will be shared soon!
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The Price History data will enable accurate calculations of historical volatility and strike prices for Yield Harbour's decentralized options markets.
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Trading market volatility:
Instead of betting on which way the market will go, traders focus on the intensity of price movements. By using options strategies such as straddles or strangles, they can gain from large swings, whether the market goes up or down
#volatility
$KUJI
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Options pricing is complex, requiring traders to depend on frameworks like Black-Scholes.
It's not as intuitive as spot markets, due to factors like volatility and time decay.
#OptionsTrading
$ATOM
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A straddle involves buying both call and put options at the same strike price, a strategy centered on market volatility rather than direction.
Key types include long straddles, ideal for volatile markets, and short straddles, suited for stable conditions.
#CosmosEcosystem
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Thanks for all of the interest! We have received an insane amount of support.
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Even if an option expires in the money, investors still need to consider market value, transaction costs, tax implications, opportunity costs, cash requirements, time value and liquidity.
#OptionsTrading
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Option Greeks are key metrics in options trading that measure an option's sensitivity to various factors.
For example, Delta (Δ) shows how much an option's price might change with a $1 move in the underlying asset.
#OptionsTrading
#Delta
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We invite all members of the Kujira community to review the proposal details and participate in the governance voting process.
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If you missed out on the first round of testnet, check your DMs - we are onboarding the next cohort soon!
$KUJI
#options
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Buying vs Writing
Buying an Option: Paying for the right to buy/sell an asset at a set price. Risk limited to the premium paid.
Writing an Option: Creating a contract with an obligation to buy/sell if exercised. Earns premium, risk is limited to collatoral supplied.
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Vega (ν), a crucial 'Greek' in options trading, is like navigating a boat in varying seas.
High Vega is a light boat, sensitive waves (market volatility).
Low Vega is a sturdy ship, steady in waves.
Vega shows how an option's price reacts to market volatility. $KUJI
#DeFi
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Risk Assessment With Gamma:
Gamma helps in assessing the risk of an options position more accurately. A high Gamma means the option's price sensitivity to the underlying asset is more susceptible to change. Small price movements will have a large impact.
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As we approach the New Year, let's flashback to
#Y2K
, a pivotal moment for financial markets. Amidst fears of computer glitches as '99 turned to '00, banks and businesses ramped up IT efforts, highlighting how tech and finance are intertwined.
#blockchain
#DeFiRevolution
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110 years ago, on December 23, the Federal Reserve System commenced operations, revolutionizing U.S. banking. Now, it serves as an inspiration for many crypto projects seeking to enhance and modernize the financial system.
#CosmosEcosystem
$KUJI
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Theta represents the rate at which an option's value decreases over time. It highlights the importance of timing in strategies, turning time decay into a strategic asset for optimizing returns.
#OptionsTrading
#Theta
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DeFi options break down barriers: All you need is internet & a digital wallet to access global financial markets anytime, anywhere. No geographical limits, open 24/7 – truly democratizing finance.
#CosmosEcosystem
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Here's an advanced one for you - Butterfly Spread:
An options strategy betting on low volatility.
Buy 1 ITM & 1 OTM option, sell 2 ATM options, same expiry, different strikes.
Max profit occurs when stock hits ATM at expiry, with limited risk. Ideal for range-bound markets.
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🧵 Abstract - a series dedicated to covering fundamental and advanced concepts commonly encountered in options trading.
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Smart contracts are revolutionizing how we handle counterparty risk in options trading.
By automating and enforcing contracts, these digital protocols reduce reliance on traditional intermediaries like clearinghouses, enhancing trust and efficiency in the market.
$KUJI $OSMO
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Options and leverage:
Options give leverage by letting you control many shares for a fraction of their full cost. Pay a small premium instead of an assets value to get right to buy/sell shares. Exposes you to same dollar risk/reward as stock but for much less upfront capital.
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In times of market volatility, using Put Options can be an effective strategy to mitigate risk. A Put Option provides the right to sell an asset at a predetermined price, helping to hedge against potential large drawdowns.
#DeFi
#RiskManagement
$KUJI
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Did you know that
@jimmy_wales
(co-founder of
@Wikipedia
) used to be an options pricing academic? 🤯
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Options Timeframes:
In European-style options, the 'timeframe' (daily, weekly, fortnightly, monthly) is crucial. It's the period you wait before you can use (exercise) your option.
Once this timeframe ends, you decide whether to exercise your options or not.
#Options
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Traditional options markets often create barriers for regular retail investors, with complex requirements and high costs.
#DeFi
options, on the other hand, offer a more inclusive alternative, providing easier access, lower fees, and transparent, decentralized platforms
$KUJI
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With what you know so far - are you more interested in call options, put options or both?
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Premiums:
An option premium is the price paid for an options contract. It's like a ticket fee to potentially buy (call) or sell (put) a stock at a set price.
It varies with factors like stock price, time until expiration, and market volatility.
#OptionsTrading
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Discover StrikeBound Liquidity: Our unique algorithmic approach to standardize strike prices for liquidity providers. It streamlines order matching, concentrates liquidity, and bolsters risk management.
#CosmosEcosystem
$ATOM
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On January 1, 1999, the Euro was officially introduced, unifying European economies under a single currency.
Today's DeFi landscape sees a daily emergence of hundreds of new cryptocurrencies, highlighting a shift towards decentralized and diverse financial ecosystems
#DeFi
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Traditional markets offer established structures but less flexibility and accessibility. DeFi options bring innovation with transparency, faster settlement and accessibility.
#CosmosEcosystem
$ATOM $KUJI
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Join the conversation! If you're keen to dive deeper into our community, we're just a click away on the official Kujira Discord server. Connect with us at 🌊🐋 $KUJI
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ITM vs. ATM vs. OTM
In the Money (ITM): Option's exercise price is favorable compared to the asset's market price.
At the Money (ATM): Exercise price equals the asset's market price.
Out of the Money (OTM): Exercise price isn't favorable, but potential for future gains.
#DeFi
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In bull markets, call options capture rising values, while bear markets make put options a strategic hedge. Mastering options means opportunities in all market conditions. 📈📉
#OptionsTrading
#CosmosEcosystem
$ATOM $KUJI
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Options Simplified: An option is a contract to buy/sell an asset at a set price. Call options = right to buy, betting on a rise. Put options = right to sell, betting on a fall.
#cosmos
$ATOM
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European-style options, exercisable only at expiration, provide predictability and lower premiums, making them suitable for precise hedging strategies. They eliminate the risk of early exercise, allowing for more straightforward valuation and risk management.
#OptionsTrading
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Fischer Black (1938-1995) was a brilliant economist who co-developed the revolutionary Black-Scholes options pricing model. His groundbreaking work on options theory and derivatives earned him the Nobel Memorial Prize in Economics in 1997, awarded posthumously.
#Options
$KUJI
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'In the Money' (ITM) vs 'Deep In the Money' (DITM).
ITM means the option has value if exercised now - like a call option with a strike price below the current spot price. DITM goes further, with a strike price far below (for calls) or above (for puts) the current price.
#Options
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Did you know options trading began in ancient Greece? Traders used olive presses as a form of early options, securing rights to use them later. New to options? You're part of a millennia-old trading legacy!
#CosmosEcosystem
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Theta (Θ) is a crucial 'Greek' in options trading, indicating how much an option's value drops as it gets one day closer to expiration.
Say a call option has a Theta of -0.05. This means it loses 5 cents in value each day.
#OptionsTrading
#Theta
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In this month over 60 years ago, the market experienced the 'Kennedy Slide' bear market. The S&P 500 fell 28% in 6 months amid economic challenges and a shifting auto industry.
#MarketHistory
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In DeFi, the risk-free interest rate is often considered zero due to the absence of universally accepted government-backed securities and the high volatility inherent in cryptocurrency markets.
#decentralized
$KUJI
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Dive into Long Straddles: Buy both call & put options at the same strike & expiry, betting on significant price moves in either direction. Ideal for high-volatility scenarios where direction is uncertain.
#OptionsStrategy
#CosmosEcosystem
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Options vs. Futures:
Imagine futures as a binding promise to buy/sell at a future date - no turning back.
Options are like a promise with a choice; you can decide to follow through or not. It's commitment vs. flexibility in trading!
#options
#derivatives
$KUJI
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Option tradeoffs:
Selling calls nets upfront premium, but caps the max profit at strike price + premium.
Gains above the strike price go to the option buyer. Seller trades away uncapped upside for certain premium income.
Tradeoff between max gains vs. premium and certainty.
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Hedging with options is like insurance for your investments.
For example, buying put options on a assets you own can protect against losses if the asset price falls, limiting downside risk while maintaining upside potential. It's a strategic move to manage financial exposure.
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On December 21, 23 years ago, the Commodity Futures Modernization Act was signed, exempting many OTC derivatives from regulatory oversight. This legislation reshaped the derivatives market, boosting growth but also sparking debates on risk and regulation.
#CosmosEcosystem
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Gamma (Γ) in options trading is a 'Greek' measuring the rate of change in Delta for a $1 move in the underlying asset.
It shows how sensitive an option's price change is to market movements.
#OptionsTrading
#Gamma
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Weekly reminder: You can find the Yield Harbour channel in the official Kujira Discord server. Join for discussions: $KUJI
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Back in 1720, the South Sea Bubble became a classic example of market mania. The South Sea Company, with its dubious promise to monopolize trade in the South Seas, inflated its stock prices to astronomical heights before crashing spectacularly.
#Markets
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This skew or asymmetry in volatilities exists because the options market is pricing in a higher chance of the stock making a really big move in either direction by expiration, compared to a smaller/moderate move.
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It's like the options market is saying "We think there's a higher probability of this stock shocking us with an extreme move, rather than just calmly staying around its current level."
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So by analyzing the volatility skew, traders can gauge the market's expectations about potential extreme moves. They can then position their options trades accordingly to try to capitalize on or protect against those expected volatility scenarios playing out.
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When you look at options prices for a given asset and expiration date, you'll notice that the implied volatilities (which drive the options premiums) are not the same across all strike prices. This unevenness in implied volatilities across strikes is called the volatility skew
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