Honey Call Options are Live on Hedgey Finance

[paul]

Having passed the proposal to add Hedgey to the 1Hive treasury Management toolkit, 30 HNY has been added to Hedgey via call options and are now available for anyone to purchase.

Why are we doing this?
Selling call options allows us to build a stablecoin treasury for 1Hive in a decentralized way and without putting sell pressure on our beloved HNY token. Building a stablecoin reserve gives us insurance to help withstand market downturns out of our control, and gives us the ability to fund future proposals with stablecoins, should we decide we want that option in order to avoid HNY being sold to cover expenses.

Why buy call options:
People buy call options to have increased positive exposure to a token during price increases. Call buyers make profits when their contracts go above the “strike” price for that contract. More tokens in a contract = more profits when it rises above the strike price. Call options are also attractive because your maximum loss risk is only the price you pay for the premium.

The benefit for 1hive Treasury:
For 1Hive, selling call options will generate xDAI for treasury management when the contracts are purchased, as well as additional xDAI if the contracts are exercised, all without any price-reducing sell pressure on HNY in Honeyswap.

The benefit for community:
Call options are an additional way to get exposure to HNY during price increases. These contracts are good until their expiration.

How to buy HNY call options:
You can view available call options for HNY and purchase at: Hedgey Moon Market

After you buy call options:
If you buy a call option, it will exist in your portfolio page at Hedgey | Decentralized Options Trading. You can resell an option at anytime before it expires or exercise it (take the profits) if it goes above the strike price.

When you purchase an option it will have an expiration date. Your option will be valid until this date.

More information at: Understanding Call Options - Hedgey

Big thanks to @iceman @hedgehood @solarmkd @D0SH and @ceresbzns for their roles in bringing this to fruition!

[project_uwb]

This is super cool. I had first got whiff of this when @D0SH retweeted the announcement from Hedgy. I have only scratched the surface of options, but do not know enough about them. I guess as we do this collaboration, may be we should also look at educating 1Hive users (through a bounty?? - Simple article/ video/tictok??) about the Options - benefits and risks especially in volatile markets. I know there will probably a lot of people that say that investment is an individual choice and everyone needs to make their own decisions, but i feel strongly about educating users especially when we give them the exposure/opportunity to experience DeFI.

[altcoins]

This is incredibly great. I’ve been using Omen’s liquidity pools to create a type of options-like experience, but this UI is stellar and platform is great. A definitely worthy project to be sending over some HNY to experiment with. I’m in for a few HNY call options.

[MrClottom]

Just ran some numbers and bought some calls. Awesome stuff! Nice way to get leverage without margin.

[altcoins]

Exactly. Days like today that shows how much of a knife that leverage, even modest leverage, can be. So many altcoins are wipsawing up and down, almost to the level that we saw earlier this month. To have an American style options platform, where you can use flash liquidation on command, is pretty powerful.

[project_uwb]

@MrClottom & @altcoins where would you suggest someone that knows nothing about options or leverage start from to educate myself! I always feel there is a really great opportunity but just that finance if probably my weakest subject! Any educational material links would be much appreciated. Especially stuff that makes it easier for normies to understand these complicated financial instruments!!

[metaverde]

I bought a small one, just to do it and be supportive.

[altcoins]

There’s a channel I like on YouTube called TastyTrades that educated me from soup to nuts. The head guy founded the platform Thinkorswim.

If I could give a few quick-and-dirty rules of thumb as it related to options they would be:

Strike Price: The price above which you’ll make a profit.
So if you get some HNY at a $500 strike and the current price of HNY is $600 then you’re $100 “in-the-money” or you have $100 profit if you used Hedgey to liquidate your position

Expiration Date: When your option expires
If you have a HNY option at $500 for Jan 1st and on December 31st it’s $475 and on January 2nd it hits $600 then you’re not going to profit from the difference because your option will have already expired.

American versus European Options: European have to be held until expiration, while American can be exercised anytime. Hedgey’s are American.

I’ve been trading derivatives for a decade and the lingo has a little bit of a learning curve, but if you take a free MOOC on Coursera/EdX then you should be right on your way. Crypto platforms are so sophisticated these days that you’re seeing all sorts of derivatives (futures, options, calendar spreads) on many, many platforms. It’s in your best interest to learn all possible ways to make a buck in our society so you can best position yourself to save for retirement without taking on unnecessary risk.

[cryptoclip]

thanks dude, this is super helpful. Are you able to give a TLDR on puts/calls, I’ve never understood the difference really, but your explanation above has made those simple

[altcoins]

Sure, @cryptoclip

Call: You profit when the instrument goes up.
A Call on HNY will profit when the price goes from $325 to anything above the current market price.

Put: You profit when the instrument goes down.
A put on BSV would profit when BSV goes from $135 to $100 exactly $35.

With a call your earnings are unlimited. You could buy a call on bitcoin when the market price was $40,000 and it goes to $4 billion on the day of option expiration. Your profit is the difference between the current market price when you bought the call and the current market place of the call minus the cost of the call option, which is priced based on how volatile the underlying instrument is.

With a put your losses are unlimited. You could go short HNY, say, and 1Hive gets absorbed by MakerDAO or some favorable event that increases the price 100x, say. Your $325 short, where your defined profit was a maximum of $325, now leaves you with a $32,175 loss because you have to return the asset to the person you’re borrowing it from. If you don’t own it then you’ll have to buy it at the market price. If it went 100x then it’ll be expensive.

Most exchanges have margin calculations that ensure that you’re well collateralized so it’s unlikely that a trade will move as aggressively against you as that, or will have subaccounts where one account’s losses don’t affect another, but it’s a good illustration to help one understand.