Enjoy Better Returns for Less Capital
Effective leverage on UpDown Options
With leverage for UpDown Options, you enjoy better returns for less capital per trade!
Why? UpDown Options have in-built effective leverage, providing you with greater exposure to the token’s price movement.
Reasons to Trade With Leverage:
- Capital Efficiency: Better returns on your capital. With the capital you save, you can trade other assets too.
- Greater Exposure With Minimized Risk: UpDown Options contracts automatically close, so your gains and losses are capped and stated upfront
- Cost-Effectiveness: If you wanted the same return with Spot trading, e.g., ETH and BTC, the amount of capital you need may be much higher as you’re holding the actual asset (dependent on token).
Let’s illustrate it with an ETH UpDown Options contract.
Scenario: You purchase a $200 ETH UpDown Options Contract with a contract price range of $3,420-3,520 when ETH’s price is $3,500. Since then, ETH’s price increased by 0.6% to $3,520.
ETH Price At Entry | $3,500 |
---|---|
ETH UpDown Options Contract Range | 3,420 – 3,520 |
Capital To purchase one ETH UpDown Options Contract | $200 ($3,500 – $3,420)*2.5 |
Your Effective Leverage | 44x ($3,500/$200*2.5)^ ^The effective leverage depends on the token’s contract value factor (CVF). ETH’s CVF is 2.5. Learn more about CVF here. . |
When ETH’s Price Increases To | $3,520 |
Your Total Gains | $250 ($3,520 – $3,420)*2.5 |
Your Final Profit | $250 – $200 and any associated fees |
Effective leverage exposes you to ETH’s full price movement with built-in risk controls. This also applies when ETH’s price drops. For example, if ETH’s price falls to $3,420, your contract is knocked out at the maximum loss and you lose the amount you put down for your trade (i.e., $200) because this is a fully collateralized contract.
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