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 โ€” 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 FuturesOptions


- Applicable Leverage: ~150X

- Typical Leverage: 5X ~ 20X

- Applicable Leverage: 1,000X~

- Typical Leverage: 50X ~ 200X


Liquidation Highly Possible

No liquidation

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