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Put-Sell Mode

Parameter

  1. 1.
    Initial ETH spot price= $1,200
  2. 2.
    The user deposits 1,000 USDC into the put-selling wheel vault at the start of the epoch
  3. 3.
    The strike price of the short put option = $1,100
  4. 4.
    Yield per epoch = 20%
  5. 5.
    The user does not initiate a withdrawal

Scenario 1: ETH expires at $1,150 (above strike price)

  1. 1.
    The put sell option expires worthless
  2. 2.
    Active position= 1,000 USDC
  3. 3.
    Profit = yield per epoch = 1,000 USDC x 20% = 200 USDC
  4. 4.
    Post settlement balance = 1,000 USDC (active position) + 200 USDC (profit) = 1,200 USDC

Scenario 2: ETH expires at $1,050 (below strike price)

  1. 1.
    The put-sell option is exercised
  2. 2.
    Active position= 1,000 USDC
  3. 3.
    Profit = yield per epoch = 1,000 USDC x 20% = 200 USDC
  4. 4.
    Post settlement balance of the active position = 1,000 USDC / $1,100 (strike price) = 0.9091 ETH (4dp)
  5. 5.
    Post settlement balance of the profit = 200 USDC / $1,050 (settlement price) = 0.1905 ETH (4dp)
  6. 6.
    Total post settlement balance = 0.9091 ETH + 0.1905 ETH = 1.0996 ETH (4dp)
  7. 7.
    The wheel vault then automatically changes from put-sell to covered call-selling mode
  8. 8.
    The user would now have a 1.0996 ETH active position in the covered call wheel vault and is earning yield in the form of ETH.
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Last modified 1mo ago