ETH Options Trading (High-risk)

Risk Category: High

Details

Vault Information

Maximum fund size: 100,000 $USDC Asset Token: $USDC ShareToken: $TeaOptions+P $TeaOptions+P Token contract Address: 0x9ae039F9de94542f6f1b3FBA60223E6aA4f411Af Deposit and Withdrawal Period: Fridays 18:00 UTC+8 – Thursdays 18:00 UTC+8 Locked Period: Thursdays 12:00 UTC+8 – Fridays 12:00 UTC+8

Summary

The ETH Options Trading strategy applies the Black-Scholes model (a differential equation widely used to price options contracts) to current market data, including spot price, strike price, expiration time, and volatility. The strategy trades ETH options on Lyra and Thales, two DeFi protocols that have different option types, on the Optimism chain.

Please refer to the Strategy Design tab for more details.

Depositing & Withdrawing

• Please see our guide on how to deposit and withdraw funds.

• If you request to deposit $USDC during Round X, your funds will enter the strategy in Round X+1, and you can claim $TeaOptions+P in Round X+1 (or later).

• The earliest you can request to redeem $TeaOptions+P into $USDC will be in Round X+1, for the funds to be removed from the strategy in Round X+2. You will be able to claim the corresponding $USDC to your wallet in Round X+2.

• If you do not redeem $TeaOptions+P into $USDC, your funds will automatically continue into the following Rounds.

Fees

Teahouse will assess Platform Fees, Management Fees, and Performance Fees for this strategy.

Platform Fees

Entry fee: None / Exit fee: 0.2%

E.g., I initially invested 1,000 $USDC, and upon exit, I have 1,500 $USDC. I will have paid 1,000 * 0.1% = 1 $USDC at entry and 1,500 * 0.2% = 3 $USDC at exit, for a total platform fee of 4 $USDC.

Management Fees

1.7% (Annualized) divide by 52 weeks to get weekly fees charged: 0.03269%

E.g., I invested 1,000 $USDC, and 1 week later, the $TeaOptions+P token value increased to 150% of the original. When exiting after a week, I will incur 1.7% * 1,500 $USDC * 1/52 = 0.49038461 $USDC. Alternatively, if it takes a full year to reach 150%, then I will incur 1.7% * 1,500 $USDC = 25.5 $USDC.

Performance Fees

20% of profits made.

Disclaimer

Your friendly Teahouse Hosts would like to remind you that nothing contained on this website should be construed as financial advice. Teahouse makes no guarantees, express or implied. Please note the high-volatility nature of cryptocurrencies and DYOR. Be responsible for your actions and beware of scams.

Strategy Design

Introduction

The ETH Options Trading strategy applies the Black-Scholes model (a differential equation widely used to price options contracts) to current market data, including spot price, strike price, expiration time, and volatility. The strategy trades ETH options on Lyra and Thales, two DeFi protocols that have different option types, on the Optimism chain.

By applying the Black-Scholes model, the strategy builds a portfolio of options that matches the strategy manager’s calculated optimal delta while maximizing trading volume in order to receive platform rewards. In other words, it seeks the optimal balance between “profits from trading options” and “profits from platform rewards”.

OP, LYRA, and THALES are the reward tokens received from Lyra and Thales; these are sold each week for additional profits.

Strategy Outline

Three key strategy elements:

• Black-Scholes model to check whether the price of the option is good (expected to be profitable)

• Manager’s judgment based on speculation and research of the various market signals

• Distribution of reward tokens from the DeFi protocols Lyra and Thales