3. Option Trading
Last updated
Last updated
Meta Defender offers a structured approach to option trading. Users can choose from three distinct option vaults, each having a unique strike price. These vaults, named in the format "vault_close_date_suffix", use the suffixes 'Glimmer', 'Flame', and 'Blaze'. Each suffix means a different strike price, letting you pick the best investment option based on what you think will happen in the market. When trading options with Meta Defender, you'll use aSEED on the Acala Mainnet, and mUSDT is a test token used for mSEED options trading on the Mandala Testnet.
On the first day of each month, Meta Defender opens three new vaults. Each vault lasts 30 days. Only in the first 10 days, called the Purchase Period/Selling Period, can users buy options and add new underwriting capital. To buy or sell aSEED options, you have to do it during this 10-day period. After that, the options are watched until the end of the cycle to see if they reach the strike price. The vaults 'Glimmer', 'Flame', and 'Blaze' match strike prices of 110%, 115%, and 130% of the aSEED price on the last day of the Purchase Period. The exact strike price is figured out and shared after the Purchase Period and Selling Period end.
It's crucial to note that only after the Selling Period concludes can option sellers withdraw any underwriting capital that hasn't been used. If the options do not strike, sellers can retrieve their remaining pledged funding after the vault's duration has ended. However, if a strike occurs, the buyer will receive the respective payouts.
Users can assume both roles, acting as both option buyers and sellers. They can choose any vault for transactions. While there are no restrictions for sellers, the amount buyers can purchase is determined by the available funds in their chosen vault.
Only active vaults are displayed by default.
Before It Starts (Page Notification: "The Selling Period has not started.")
Prepare your funds and strategy for the upcoming Selling Period.
While It's Ongoing (Page Notification: "x days left until the end of Selling Period.")
Add Underwriting Capital: Option sellers can pledge capital to back option trading during these days.
After It Ends (Page Notification: "The Selling Period has ended.")
Underwriting Activities: Sellers can no longer provide liquidity for the current vaults.
Review and Analysis: Analyze the performance of your provided liquidity and strategize for the next trading cycle.
Before It Starts (Page Notification: "The Purchase Period has not started.")
Evaluate the available vaults and get ready to initiate option purchases.
While It's Ongoing (Page Notification: "x days left until the end of Purchase Period.")
Buy Options: Option buyers can select from the available vaults and purchase options based on their market predictions.
After It Ends (Page Notification: "The Purchase Period has ended.")
Options Transactions: No further options can be bought or sold.
Review and Analysis: Analyze the performance of your options and strategize for the next trading cycle.
Upon seeing both notifications: "The Selling Period has ended." & "The Purchase Period has ended."
Withdrawal: Option sellers can now withdraw any underwriting capital that hasn't been used. Please refer to the Seller Certificate section for more details of removing liquidity
Next, we'll use the "231019_Glimmer" vault as an example to explain how aSEED option trading works. You'll see things like pool names, strike prices, option types, rates, aSEED capacity, and how much is traded.
Key Terms:
Option Type: Every vault launched by Meta Defender offers Call Options. Hence, all three vaults during any cycle, provide Call Options.
Capacity: Indicates the maximum amount of options a buyer can purchase.
Capacity Occupied: Represents the amount of the total capacity that's already been bought.
Option Rate: This is the annualized fee rate that buyers pay to sellers upon securing options.
Option Sold: Amount of options that have been sold.
Strike Price: The price at which the option may be exercised. For instance, in "231019_Glimmer", the strike price is displayed as 110% before the Purchase Period concludes. After the Purchase Period, the actual strike price is set.
Before you start trading, make sure you understand the rules, how it works, when you can buy or sell options, what happens if the aSEED price reaches the strike price, and how sellers take care of their money.
