๐Ÿ‹
Moby
  • Letโ€™s Get Started
    • ๐Ÿ‹ About Moby
    • โšก Our Vision
    • ๐Ÿค“ Your Guidebook
      • Get Setup
        • Connect Wallet
        • Trade Options
        • 0DTE Options
        • Provide Liquidity
      • Fees & Instruments
        • Fee Generation
        • Fee Distribution
        • Instruments
      • Testnet
  • How itโ€™s Built
    • ๐Ÿš€ Synchronized Liquidity Engine (SLE)
    • ๐Ÿงฎ Options Pricing Model
      • Mark Price
        • Futures Index
        • Implied Volatility
      • Risk Premium
        • Deriving Greeks
        • Risk Premium Calculation
        • Risk Managing Mechanism
    • ๐Ÿค– Architecture
      • Liquidity Provision Mechanism
      • Options Listing Standard
      • How to Open / Close / Settle Position
      • Synchronized Liquidity Engine (SLE)
      • Options Position Tokens
      • Tools to Maximize Capital Efficiency
    • โš™๏ธ Key Features
      • High Leverage & Limited Risk with No Liquidation
      • Narrow Spread with Dynamic Risk Premium
      • Guaranteed Settlement
      • Capital Efficiency Improvements with Combo Options
      • Even Higher Capital Efficiency with Clearing House
      • Abundant Liquidity for All Options
      • Composable Options for Structured Products
      • High Profitability for LPs
      • Real-Time Automatically Hedged OLP
      • Upcoming Features
    • โ›“ DeFi Options Vault
      • ๐Ÿป Berachain DeFi Options Vault
        • ๐Ÿ”’ Architecture
        • ๐Ÿ“ˆ Options Strategy
  • How itโ€™s Driven
    • ๐Ÿ›ก๏ธ Building the Safest DeFi Protocol
      • Safety Features
      • Smart Contract Audit & Real-Time Security Monitoring
    • ๐Ÿ› Backed by Decentralized Governance
      • Governance
    • ๐ŸŒ Led by the Best Partners & Community
      • Arbitrum X Moby
      • Engagement Programs
  • Need More Info?
    • ๐Ÿ“š Resource Library
      • Developer Resources & Educational Contents
      • Terms & Conditions
      • Glossary
      • FAQ
  • Developers
    • Moby Traders API
      • REST API
        • General
        • Account
        • Market
    • Trade Scripts
      • Prerequisites
      • Open Positions
      • Close Positions
    • Interfaces & ABI
      • PositionManager.sol
      • SettleManager.sol
      • RewardRouterV2.sol
      • OptionsMarket.sol
    • Appendix 1: Parameters for Open/Close Options
    • Appendix 2: the Diff between optionId and optionTokenId
    • Appendix 3: Sample Moby Contract Module for Developers
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  • High Leverage
  • Limited Risk with No Liquidation
  • Comparative Reference - Perpetual Futures vs. Options
  1. How itโ€™s Built
  2. โš™๏ธ Key Features

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 Futures
Options

Leverage

- Applicable Leverage: ~150X

- Typical Leverage: 5X ~ 20X

- Applicable Leverage: 1,000X~

- Typical Leverage: 50X ~ 200X

Liquidation

Liquidation Highly Possible

No liquidation

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Last updated 1 year ago