Try Quests to earn crypto3 - Calls vs. Puts
Ribbon offers both covered call and put-selling automated strategies. This analysis shows the TVL over time visualization of four main pools (ETH and BTC covered calls, yvUSDC-ETH, USDC-ETH puts) on Ribbon. Also, we have discussed the most popular strategy by TVL and the comparison of TVL for put-selling and covered call strategies.
Takeaway I: As seen in the above result, this bar chart shows the TVL of four pools of Ribbon held by each of four different pool names since the beginning of January 2022. ETH call pool is occupied the most TVL over considered time whereas the lowest TVL is found on WBTC call pool.
Takeaway II: The above bar chart depicts the popularity comparison in TVL change over time since the beginning of January 2022. We can see that the covered call strategy has gained more popularity than the put-selling strategy, indicating that Ribbon users are more likely to select earning yield for selling the potential upside of an asset.
Ribbon Finance is a novel protocol that enables consumers to have access to crypto-structured DeFi products. It blends options, futures, and fixed income to optimize the risk-reward profile of a portfolio.
Theta Vault is a high-yielding Ethereum and WBTC strategy. A weekly automatic options selling method is used to generate yield on the vault's deposits. The vault reinvests the income into the strategy, thereby compounding depositor returns over time. In order to create yields, the Theta Vaults use two strategies:
- Covered call - Vault writes out of the money-covered calls.
- Put selling - Vault writes out of the money puts.
Apart from writing options, monies kept in Theta Vaults currently produce no income. Every Friday, the vault converts 100 percent of its USDC balance into yvUSDC by depositing USDC into the Yearn USDC yVault. This allows depositors to acquire exposure to the Yearn yield in addition to the options strategy.
Theta Vaults uses the name "vault" because it derives from the concept of setting and forgetting your assets in a vault and receiving a profit on them. Users may simply put their assets into a smart contract, which will then begin to operate a particular options strategy on their behalf. By spreading the gas expenses among all vault depositors, this solves the bulk of the gas concerns. The vault will do 3–4 transactions per week for thousands of users at once, rather than 3–4 transactions per week per user. This simplifies and reduces the cost of utilizing these Theta Vaults by allowing users to deposit, wait for dividends, then withdraw.
The covered call strategy is a one-of-a-kind options strategy in which you generate a profit by selling an asset's future gain. For example, selling a $25k call option can pay you 2% in return provided you are ready to give up possible gain if ETH rises over $25k before the end of the year. This is more than ten times the return you can get by giving ETH on Compound. In the rare event that ETH reaches $30k, you will have lost $5k, but you will still be well ahead in USD terms – it is a win-win situation for you since you only risk being exercised if ETH reaches $30k.
Now that we've learned a bit about Ribbon Finance, let's move on to the next step. To begin, we calculate the TVL over time visualization of four major pools (ETH and BTC covered calls, yvUSDC-ETH, and USDC-ETH puts) on Ribbon Finance.
Secondly, We try to make the comparison of TVL for the put-selling and covered call strategies since the beginning of January 2022.
