Volt#02: Sustainable Stables

Cash-secured Put Selling

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How does it work?

The “Cash Secured Put” is a stablecoin strategy with a similar payout profile to the “Covered Call”. Traders will sell a put option and maintain enough cash to purchase the underlying asset at the predetermined strike price. This strategy is relatively low risk because a 100% collateral ratio is maintained.
A cash-covered put is a 2-part strategy that involves selling an out-of-the-money put option while simultaneously setting aside the capital needed to purchase the underlying stock if it hits the option’s strike price. The goal of this strategy is to acquire the stock at a lower price than the market’s offering if the option gets assigned to you.
By selling a cash-covered put, you collect money (the premium) from an option buyer. The buyer pays this premium for the right to sell you an asset at the set strike price.

When should I use this strategy?

Cash-secured puts are most profitable during a low volatility, moderately bullish market. However, the volt will profit if the price of the underlying asset does not fall below the chosen strike prices. This leads to a consistently high win rate.

How long do epochs last?

The Volt rebalances weekly at Friday 2am UTC. An epoch consists of holding a short put position until expiry. If there are net deposits, the volt will sell more options in the following week. If there are net withdrawals, the volt will sell fewer options.

What are the risks?

During extreme downward market moves, if spot price moves below the set strike price it may result in loss of principal. Currently the Volts are cash-settled meaning the deposits are not used to buy back the underlying asset. For insights into historical performance you can explore our Analytics page.

What is the historical performance?

All strategy performance and returns data can be easily found on our Analytics page linked below. To find a tutorial and guide for this, you can visit the Analytics page of our Documentation.

Learn more about how this strategy works!