High Leverage & Limited Risk with No Liquidation

Trading options is inherently associated with applying high leverage, effectively capping the potential loss against the options premium, a small initial cost to open a position.

Consequently, options trading emerges as a compelling investment avenue, significantly reducing the risk of liquidation and offering a balanced approach to managing financial exposure.

High Leverage

• Traders can pursue potentially high returns through speculation on substantial price movements of the underlying asset, achieved with minimal initial expenditure by investing in the option's premium

• Short-term, OTM options, such as 0DTE options, are favored by traders for their low cost and high leverage — representing over 50% of trading volume in US Equity Options Market

• During the testnet phase on Moby, it was observed that traders predominantly favor 0DTE options, commonly employing leverage ranging from 50X to 200X

Limited Risk with No Liquidation

• Traders are exposed to a high risk of liquidation for instruments such as perpetual futures due to the substantial borrowing of capital required to apply leverage

• In contrast, options confine the maximum loss traders can incur to the initial premium paid, eliminating additional loss risks and the need for margin management

Comparative Reference - Perpetual Futures vs. Options

	Perpetual Futures	Options
Leverage	- Applicable Leverage: ~150X - Typical Leverage: 5X ~ 20X	- Applicable Leverage: 1,000X~ - Typical Leverage: 50X ~ 200X
Liquidation	Liquidation Highly Possible	No liquidation