Traders

Global access to fair-priced equity derivatives.

With the help of oracles with accurate live data, we provide efficient option pricing.

Taking a peer-to-pool approach ensures deep liquidity so orders will always be filled.

By also ensuring covered calls and cash-secured puts, traders are paid out in full with zero counterparty risk.

Why Trade option contracts

There are two key areas where options really show how powerful they are.

Hedging risk

Options require less capital to purchase than owning the underlying asset outright so, the premium (option contract price) can be used as insurance to protect from sudden price fluctuations. The real value lies in the fact option contracts can protect you 24/7 before and after market close.

To take an example

Assume you buy SPY shares at $300 and put a stop-loss at $294 (2% drop). If SPY trades at $294 or below, this stop-loss will be executed. If we assume you hold this position overnight and the next day some catastrophic event occurs leading to SPY opening at $280 at market open then the moment the market opens your initial stop-loss will be filled at $280 resulting in a big loss.

Purchasing a put option however as a hedge for protection in this scenario would create no loss. Although your shares will drop and be sold at $280, the put option will recoup and profit from the drop with you only ever having to initially pay the small premium.

Leveraging and magnifying returns.

By taking option positions with a fraction of the capital needed for a stock position, traders can increase potential returns by magnitudes.

To take an example

Assume you buy SPY shares at $300 and a separate call option with a $270 strike for $30. Assuming the call option has a delta of 0.20 (meaning a stock price change changes the option price by 20%) if the stock went up to $330 then the stock position will return 10%. The option position however will return 20 delta or $6 on a $30 premium which is a 20% return. Of course, if the trade went the opposite direction, it could mean the contract would expire worthless and the premium paid ($30) would be lost.

There are more complex strategies and use cases for options however starting to understand and incorporate them is what can yield safe and high-potential returns.