Price Optimization

As a pool administrator you can create a pool and configure a unique strategy that you or anyone else can provide liquidity to. Being a pool administrator allows you to sell options using your own strategies.

These are some examples of varying approaches that could be used:

  • Custom pricing function

  • 1 pool with many assets

  • 1 pool with 1 asset

  • Sell puts or calls only

  • Specific expiry lengths

  • Different hedge token

  • Delta hedging strategy

The pool that provides best price for a given oracle is what is offered to purchase.

The pool administration guide covers the steps & technical details for how you could implement them.

Custom pricing function

The default pricing function is based on the pool utilization and the ratio or puts/calls. A pool can be customized to use any function that implements the IFees interface.

This may be useful if you have a dynamic/implied volatility function or other custom function that can provide a better price in specific scenarios.

1 pool with many oracles

A pool can be customized to sell options for many oracles.

This might make sense where there are underserved markets or to use deep liquidity pools to provide options to a broad range of markets.

Option prices should typically reflect the most volatile assets in the pool. Therefore this strategy works well for providing options for a very broad range of assets where there is demand but may not provide accurate pricing for all assets in the pool.

1 pool with 1 oracle

A pool can be customized to only sell options for a single oracle.

Creating a pool that only provides options for a single or small group of correlated assets should allow for accurate pricing for that asset.

Sell puts or calls only

A pool can be customized to only selling puts or calls.

Specific expiry lengths

A pool can be customized to only selling options for specific expiry lengths.

Different hedge token

Optyn liquidity is stored in Uniswap V2 compatible swap pools. One of the tokens is the collateral token which is what is used to pay premium and payout profitable trades. Any other token can make up the pair.

A pool can specialize by creating a pair with a different hedge asset.

Delta hedging strategy

You may have a strategy where you can delta hedge more effectively either off chain or using some other techniques.