SSOV (Single Staking Options Vault)
SSOVs, enable users to temporarily lock up tokens in order to provide option liquidity and earn a yield on their assets. This is accomplished by depositing assets into a contract, which are then used as collateral to sell covered calls or cash-secured put options at pre-determined strikes and expiries (e.g. monthly or weekly) to buyers.
- 1.Pre-set terms: User chooses which vault they'd like to provide option liquidity for, as well as at which strike and expiry (weekly/monthly).
- 2.Deposit assets: The user deposits and locks the underlying asset into the vault, which serves as collateral.
- 3.Earning a yield: Users passively earn numerous sources of yield on locked assets including DPX emissions, yield-bearing assets, and premiums.
- 4.Provision of option liquidity: The deposited assets are then used to sell covered calls or cash-secured put options to buyers.
- 5.Option buyers: Buyers can now purchase the available options offered by the sellers by paying a premium.
- 6.Expiry and settlement: At the end of the options' expiry period, they are settled, and the assets are returned to the users, who can then withdraw them.
In summary, SSOVs allow users to temporarily lock up their assets, sell options to buyers, and earn a yield in the process, all while providing option liquidity to the market.
The platform provides a simple and convenient way for buyers to purchase calls from the vaults using the base asset. This is done through the platform dapp, which allows users to purchase using the vault underlying asset. The four-strike vaults are straightforward and easy to follow, making them accessible to all users regardless of their level of experience. Once the purchase is made, the premium is securely stored in the vault, and an NFT receipt representing the position is given back to the purchaser. This system provides a reliable and efficient solution for option buyers looking to open a specific option position.
As an SSOV depositor, you'll receive not only premiums calculated through our option pricing model but in some instances, also DPX emissions and yield from receipt tokens (yield-bearing assets). However, it's important to note that while USD notional value remains intact, there is a possibility of losing a percentage of the locked assets.
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CALLS: Base Token PUTS: Quote Token
Margin requirements (writing)
Fully backed by collateral
CALLS - Base Token PUTS - Quote Token
By default, all options are automatically exercised upon expiry, allowing for flexible settlement at the user's convenience. The process is a net settlement, meaning it occurs without the need for the underlying asset. The profit and loss of the option are calculated, and if positive, the option token is burned, transferring the computed profits to the user's wallet. PnL is calculated in the following manner:
In the above formula, price is the spot price of the asset and Amount is the number of options being exercised.
We have introduced an updated fee structure for SSOVs calling it the Fee Multiplier for all our current and upcoming Single Staking Options Vaults (SSOVs). The Fee multiplier is a simple % based multiplier that multiplies fees for Out of the Money (OTM) strikes for call options to account for higher volatilities.
- Strike - 2000 Current Price of Asset - 1000
- Fee Multiplier = 1 + ((2000/1000) - 1)
- Final Fee = Base Fee * Fee Multiplier
For more information on SSOVs check out our blog posts: