☸️Bearish Options
Options AI offers four different types of bearish options:
Put
Strip (Classic Strategy)
Bear Put Spread (Classic Strategy)
Bear Call Spread (Inversion Strategy)
Put Options
Definition: A put option is an on-chain contract that gives the buyer the right, but not the obligation, to sell ETH or BTC at a fixed price during a certain period.
How Put Options Work:
The buyer chooses the size, period, and strike price for the option contract.
Size: Number of option contracts being acquired.
Period: Number of days the contract will be active.
Strike Price: Pre-determined price at which the buyer can sell the asset.
The premium is calculated based on the chosen parameters, and the buyer pays this amount in USDC.e using their wallet.
Upon payment, the buyer receives an ERC721 option token representing the purchased option.
The buyer can exercise the put option during the selected period using the ERC721 token.
Outcome: If the price of the asset falls below the strike price, the buyer profits. If it does not, the option expires worthless, and the seller keeps the premium.
Exercise Process:
The buyer sends the ERC721 token to the protocol to exercise the option and receives the profit in USDC.e.
The contract must be exercised before the expiration time, provided the price is below the strike price.
Available Periods and Strike Prices:
Periods: Ranging from 7 to 90 days.
Strike Prices: ATM (current market price) and three OTM prices:
Market Price - 10%
Market Price - 20%
Market Price - 30%
Example:
Market price of ETH: $2,337.
OTM Strike #1: $2,103
OTM Strike #2: $1,869
OTM Strike #3: $1,636
Advanced Strategies
Strip Strategy
Structure: One call option and two put options with the same strike price and expiration.
Profit Potential: High profits if the price falls sharply, reasonable profits if the price rises.
Use Case: Betting on rising volatility with a bearish bias.
Bear Put Spread
Structure: Buying an ATM put option and selling an OTM put option with a lower strike price.
Profit Potential: Decent profits if the price falls to a certain level with lower cost than an ATM put.
Use Case: Betting on a moderate price drop.
Bear Call Spread
Structure: Selling an ATM call option and buying an OTM call option with a higher strike price.
Profit Potential: Profits if the price stays the same or falls, with immediate profit potential after purchase.
Use Case: Betting on a stable or falling price without waiting for a drop.
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