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Thetanuts is a cross chain structured products Protocols that provides Vaults performing various options strategies, it was designed with the everyday person in mind, radically simplifying the yield earning process and providing exposure to options. Thetanuts is currently live on ETH, BSC, AVAX with Polygon and FTM and many other chains launching soon.
With the power of Defi, we are able to provide complicated strategies at the click of the button without the hassle and risk of mismanaged execution or calculation.
Options are complex financial tools with different strategies for different market conditions, currently we have a covered put/call vault but we envision vaults with other strategies in the future.
Strategies will be covered in the strategy section of the Gitbook but for a more comprehensive understanding we encourage you to visit reputable sites such as Investopedia or Optionsplaybook. Simply search the name of the vault’s strategy and you should be able to find a walkthrough behind how it works and why.
Disclaimer: Although it can be profitable, It must be understood that it is possible to obtain no yield or even lose value in our vaults should they expire against the vaults strategy. Be mindful of the risks involved and do your own research.
When you deposit into a vault during a current epoch, it will hold your funds in escrow in a smart contract. Once the new Epoch begins, the funds are automatically part of the new epoch and yield generating.
When the vault is at max cap, users cannot deposit more funds, until the Protocol team raises the max cap.
Thetanuts epochs can vary for different assets and vaults. They tend to run either for one week or bi-weekly per epoch. The options are usually settled on fridays at expiry and then a new epoch will begin. At the start of the new Epoch, the deposits are sent from the escrow smart contract to the actual vault smart contract.
When you request withdrawal, it is not always able to be withdrawn immediately. It is queued to allow you to withdraw when the epoch ends. So the vault is not undercollateralized while the epoch is active.
In summary you are unable to withdraw until the epoch ends on friday. Until then initiating a withdrawal simply queues a withdrawal command to be initiated on friday.
A covered call is when the vault holds a long position in an asset and then sells call options on that same asset hence why it is “covered”. The main source of revenue from this strategy is from earning options premiums.
Most commonly employed by those intending to hold the underlying asset for a long time but do not expect a big price movement in the short term until the relevant expiry date. Usually leans towards a more bullish sentiment.
The risk of covered calls is missing out on coin appreciation in exchange for consistent premium. If the assets value appreciates greatly, the vault strategy will only benefit up to the strike price but no higher as a call was written.
Covered Puts is when the vault holds a short position in a coin and also sells a short put position. Maintaining both positions allows the vault to hedge its risk and receive a premium.
Covered puts are neutral with a very slight bearish bias. It is typically used by participants that believe there will be sideways movement in the short run till the period of expiry. Options were created to hedge risks and it is possible to take profit
Covered options strategies prevent profit from significant movements as you would have already established the minimum buying price by your covered put. This means that your potential upside is capped in exchange for the certainty of receiving a premium.
