Test your knowledge of Advanced DeFi Options Concepts

Exam: Advanced DeFi Options Concepts

Volatility skew tells traders how much Theta is expected to change in the near-term.

Volatility skew can be used to determine whether options or perps should be used for a given trade.

Volatility skew can be used to identify under- or overpriced options based on implied volatility.

What can volatility skew be useful for in DeFi options?

The likeliness of rapid near-term changes in implied volatility.

The sensitivity of an option's Theta relative to underlying price action.

The sensitivity of an option's price to a $1 change in the price of the underlying asset, serving as a proxy for the option's exposure to the underlying price.

Call-put parity helps traders identify whether or not an asset is underpriced.

Call-put parity helps traders identify profitable price differences between options with identical terms. In other words, arbitrage opportunities.

Call-put parity helps traders choose between employing long calls or long puts. 

What does the concept of call-put parity help traders identify?

Access to various exchanges, real-time market data, sufficient capital on each exchange, and very fast trade execution.

Access to various exchanges, one price chart, and an API.

Access to sufficient capital on various exchanges, insider information, and real-time market data.

What do traders generally need in order to capitalize on arbitrage opportunities?

Join The Blue Season on Galxe

Exam: Advanced DeFi Options Concepts

Test Yourself!