Covered Call Mode
- 1.Initial ETH spot price = $1,200
- 2.The user deposits 5 ETH into the covered call-selling wheel vault at the start of the epoch
- 3.The strike price of the covered call option = $1,500
- 4.Yield per epoch = 20%
- 5.The user does not initiate withdrawal
- 1.The covered call option expires worthless
- 2.Active position= 5 ETH
- 3.Profit = yield per epoch = 5 x 20% = 1 ETH
- 4.Post settlement balance = 5 ETH (active position) + 1 ETH (profit) = 6 ETH
- 1.The covered call option is exercised
- 2.Active position= 5 ETH
- 3.Profit = yield per epoch = 5 x 20% = 1 ETH
- 4.Post settlement balance of the active position = 5 ETH x $1,500 (strike price) = 7,500 USDC
- 5.Post settlement balance of the profit = 1 ETH x $1,600 (settlement price) = 1,600 USDC
- 6.Total post-settlement balance = 7,500 USDC + 1,600 USDC = 9,100 USDC
- 7.The wheel vault then automatically changes from covered call-selling to put-selling mode now has a 9,100 USDC active position in the put-sell wheel vault and is earning yield in the form of USDC.
Last modified 7mo ago