🏎️Turbo Options
What is a Turbo Option?
For anybody familiar with options in trad-fi, a Turbo-up option is similar to a call option and a Turbo-down is similar to a put option. The key difference with a ‘Turbo Option’ is the asset being used for deposits is the same asset that’s being speculated on.
We think options are critical to speculating and hedging in crypto, due to their less expensive nature than perps, or other instruments, while having payoff levels that can exceed levered positions, and hedged downside risk.
A turbo option tracks whether an asset’s price reaches a strike price before the option expires and triggers a payout to premium buyers if it does. Turbo options can be used to speculate on moves upwards and downwards, a Turbo-up option would have a strike above the asset’s current price and a Turbo-down option would have a strike below the asset’s current price.
What should we know about Turbo options?
Turbo option markets will provide an experience similar to Earthquake where an ERC20 can be deposited to buy premium or provide collateral. In a Turbo market for GMX, GMX would be used as the deposit asset for both directions — the Turbo-up market would speculate on GMX price moving upwards and Turbo-down market would speculate on GMX price moving downwards.
This will turbocharge the payouts for premium buyers. For example, if you’re using GMX to buy premium in a Turbo-up market your payout will be the premium multiplier (e.g. 5x) plus the percentage increase in GMX (e.g. 100%). If you bought $100 of premium where the multiplier was 5x and the price increased by 100% your position would be worth $1000 (10x) if the strike is hit vs. $500 (5x) if a stablecoin was used for the deposit asset.
This will also allow our community to earn a yield on token’s in their portfolio. For example, if you’re holding GMX and think the price is going up, you can use your GMX as collateral in the GMX Turbo-down market and you will earn yield on the way up (while GMX price is above the strike).
Why do Turbo options matter?
If you have a big boy bag and want to earn yield on your tokens, Y2K will be the place to do that. When the supercycle ends and you need protection from the 50% wick down, you can buy Turbo-down options for protection. When you need a levered long on the new shitcoin going to the moon and there’s no perp, you know where the Turbo-up is.
Turbo options let you speculate on direction, earn yield on tokens, and protect your bag. They’re useful for individual tokens and can be incredibly useful for baskets of assets or unique data points that aren’t tracked on-chain.
If you take anything away from this article, just remember:
Turbo up markets have boosted payouts from the price increase of the asset and the multiplier… “Hello turbo returns”
Turbo down markets let you earn yield on token’s you’re bullish on by providing them as collateral… “Earn on the way up”
When should I use Turbo options?
There’s two easy situations to understand where you can use Turbo options:
When you expect the market to go up
When you expect the market to go down or sideways
When you expect the market to go up
You can speculate on the move up and earn yield on token’s you’re holding.
1 — Buy premium on Turbo-up
Speculate on a token’s price going above the strike price — you could buy premium using GMX tokens to speculate on GMX’s price being more than $100. If the price of GMX does hit the strike price then it would lead to a turbocharged payoff.
2 — Provide collateral on Turbo-down
Earn yield while the token’s price is above the strike — you could provide GMX tokens as collateral and earn a yield such as 1% every epoch while the GMX price is above the strike.
When you expect the market to go down or sideways
You can speculate on the move down and earn yield on token’s you’re holding.
1 — Provide collateral to Turbo-up
Earn yield while the token’s price is below the strike — you could provide GMX tokens to the collateral side and earn a yield such as 1% every epoch while the GMX price is below the strike.
2 — Buy premium on Turbo-down
Speculate on a token’s price going below the strike price — you could buy premium using GMX tokens to speculate on GMX’s price being less than $25. If the price of GMX does hit the strike price then it would lead to a payoff in multiples of GMX.
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