Abundant Liquidity for All Options

Solving the Capital Limitation Problem

In orderbook-based exchanges, placing a quote to buy or sell an option requires traders and LPs to commit capital, constraining the volume and frequency of opening positions
Moby's Options Liquidity Pools (OLPs) are distinguished by their ability to supply liquidity for all options positions on a 24/7 basis without capital limitation

Moby boosts capital efficiency by mandating capital only at the time of trade execution, eliminating the need for capital with each quote
Traders on Orderbook-based exchanges, like the liquidity provider, need capital whenever they place a quote in the orderbook
This limits the liquidity due to the capital efficiency of the liquidity provider
Conversely, OLP does not tie up capital every time you quote; it only happens when you execute a trade at the options price (premium)
Because of this, OLPs can utilize all of their capital for every option specification
Example: On an orderbook-based exchange, a Liquidity Provider with $100 can order $1 for each order book with 100 options. In Moby, an OLP with $100 would quote all 100 options at $100 each

Closing In ITM Options on orderbook-based exchanges poses challenges due to their high intrinsic value-driven price, leading to low profitability and consequently minimal incentive for LPs to offer liquidity
The lack of incentive for LPs to back ITM Options leads to a liquidity shortage and difficulties for traders to close or sell their ITM Options positions
This scarcity makes it hard for traders to realize profit on successful predictions, as limited buyers or sellers are available to facilitate the trade

Moby's OLPs do not require capital upfront to supply liquidity, which significantly facilitates the provision of required liquidity to close ITM Options
Moby’s round-the-clock liquidity provision ensures a seamless trading experience, enabling efficient strategy execution and position management for traders, especially in situations where traditional platforms might face liquidity constraints

Last updated 8 months ago