The first step towards mastering risk management in DeFi options!

Introduction to Mastering Risk

Crypto options can position you to make monies in any market condition.

💡 Marty's Masterclass

Introduction

Crypto Options: Mastering risk management is almost synonymous to mastering crypto options themselves

Overview

Mastering Risk in Crypto Options: Ready to learn, Anon? Let's get started!

Introduction to Mastering Risk in Crypto Options

Master the art of risk management for Calls and Puts in crypto options.

Master the art of risk management for crypto options!

Risks of Calls & Puts: Long/Short

This curriculum will aid you in your quest of becoming a true options savant, starting with risk management for long/short calls & puts.

💡 Mastering Risk: Long/Short Calls & Puts

Long Calls

Long Calls: A bet on the appreciation of a cryptocurrency doesn't come without drawbacks; even a correctly anticipated upward move might not be sufficient to generate profits. 

Long Puts

Long Puts: Although an effective hedging tool in bear markets, long puts can quickly lose their value with the everchanging market conditions.

Short Calls

Short Calls: In the volatile crypto markets, selling options is an especially high-risk strategy.

Short Puts

Short Puts: As with selling calls, selling puts can quickly lead to significant downturns in the event of a sharp turn in the markets.

Advanced Considerations

Implied Volatility (IV)

Time Decay (Theta)

Liquidity

Risk of Total Loss

Understanding Risk: Not only is understanding risk paramount in crypto options, it's essential to know the practical methods for managing it.

Risks of Long Calls/Puts and Short Calls/Puts

Master the risks involved with short straddles and strangles in crypto options.

Master the risks involved with short straddles and strangles in crypto options!

Risks of Short Straddles and Strangles

In this lesson of the Masterclass, you will learn about:

💡 Mastering Risk: Short Straddles and Strangles

Short Straddles

Risks of Short Straddles

Managing Short Straddles

Short Straddles: A strategy that profits from lack of price action, its main risk derives from potential sudden volatility in any direction.

Short Strangles

Risks of Short Strangles

Managing Short Strangles

Short Strangle: Similarly to the short straddle, this strategy benefits from lack of volatility, although it offers a wider range for profitability in comparison.

Master the risks involved with long straddles and strangles in crypto options.

Risks of Long Straddles and Strangles

💡 Mastering Risk: Long Straddles and Strangles

Long Straddles

Risks of Long Straddles

Managing Long Straddles

Long Straddle: The primary threat being theta decay, the straddle will gradually lose value if the underlying cryptocurrency remains range-bound.

Long Strangles

Risks of Long Strangles

Managing Long Strangles

Master the risk management of call & put spreads in crypto options.

Managing Call & Put Spreads

💡 Mastering Risk: Call & Put Spreads

Long Call Spreads (Bull Call Spreads)

Risks of Bull Call Spreads

Managing Bull Call Spreads

Bull Call Spread: Inherently a lower risk strategy, the largest risks come from price surging beyond the higher strike, or simply remaining below the lower strike.

Short Call Spreads (Bear Call Spreads)

Risks of Bear Call Spreads

Managing Bear Call Spreads

Bear Call Spreads: This strategy profits from a lack of significant upward movement in the underlying, the main risk being a sharp upwards surge. 

Long Put Spreads (Bear Put Spreads)

Risks of Long Put Spreads

Managing Long Put Spreads

Managing Positions: If a significant portion of the maximum potential profit has been realized, it can be beneficial to close the position early.

Short Put Spreads (Bull Put Spreads)

Risks of Short Put Spreads

Managing Short Put Spreads

Advanced Considerations for Both Strategies

Choosing the right options strategy depends on your market outlook, risk tolerance, capital availability, and desired profit potential. Each strategy has its own set of advantages and trade-offs. Ideally, you'd want to understand not just the mechanics of each strategy but also the underlying market dynamics that make one strategy preferable over another in a given situation. Here's a breakdown: 

Choosing Between Strategies

Long Call

Long Call Spread

Long Call vs Long Call Spread: The spread reduces overall cost while also potentially reducing overall profit. Generally, the long call spread is used when moderately bullish, while a plain long call is used when extremely bullish.

Long Put Spread

Long Put

Long Put Spread vs Long Put: Like their call option counterparts, these strategies differ in the amount of downside (and upside) they provide.

Master the art of managing the Greeks of a crypto options portfolio!

In this article of the masterclass, you will learn about:

💡 Managing Greeks

Delta

Managing Delta: Traders often employ dynamic delta hedging, a strategy that requires a deep understanding of the underlying's price path characteristics, potential jumps, and the correlation between different assets in the portfolio.

Gamma

Managing Gamma: Traders can employ strategies such as rolling their positions or gamma scalping to manage exposure or to profit from price oscillations.

Vega

Managing Vega: Understanding the volatility surface can unravel possibilities for taking advantage of vega. Traders can also consider strategies that benefit from changes in volatility, like straddles or strangles, to harness vega.

Theta

Theta (Marty's favorite): Theta is paid daily. This is important because options have an expiration date, and as that date approaches, the value of the option can decrease rapidly.

Rho: While it is not paramount in crypto options, studying rho can provide valuable understanding about option pricing on crypto platforms.

Managing the Greeks of a Portfolio

See if your knowledge of risk management in crypto options is that of a masterclass trader!

Test your knowledge of risk management in crypto options!

Exam: Mastering Risk in Crypto Options

Take your knowledge of risk and position management to another level with this Masterclass. Completing the Options 101 and Strategy curriculums first is recommended for prerequisite concepts.

Take your knowledge of risk management to another level with this Masterclass.

Course overview