UpYield Finance Docs
  • What is UpYield Finance
    • Why UpYield Finance
    • How is Yield Generated
  • FAQ
  • How It Works
    • Connecting your Wallet
    • Choosing a Vault
    • How to Deposit
    • How to Withdraw
  • Products
    • Basic Vaults
      • Covered Calls
      • Protective Puts
      • RWA Yield
      • Market Neutral Liquid Staking
    • Advanced
      • Delta-Hedge Liquidity Provision
      • Covered Call Spread
      • Iron Condor
      • Shark Fin
      • Diagonal Spread
      • Collar
      • Collaterized Debt
      • Uncollaterized Debt
  • The Protocol
    • Vaults Architecture
    • Vault Lifecycle
    • Smart Contract Architecture
    • Smart Contract Addresses
    • Strike Price Selection for Options
    • Options Settlement
    • Cross-Chain Execution
    • Protocol Fees
  • UpYield Finance DAO
    • Governance
    • DAO Treasury
    • Tokenomics
  • Security and Risk
    • Risks
    • Audits
    • Best Practices
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  2. Basic Vaults

Protective Puts

In this strategy the investor sells out of the money put options on underlying asset (e.g. Bitcoin). Typically an investor would deposit stable-coins into a vault and it will accrue yield from the options premium. The protocol will automatically create and sell put options at a price calculated by an algorithm based on market conditions.

Benefits

  • Best in bull to moderately bearish markets

  • Put selling is ideal for a user who wants to accumulate more stable coins and holds the a market view that the market will be moving sideways or upwards for the duration of the sold put option.

Risks

  • If the price of the underlying asset goes below the put option’s strike price at expiration and the options are in-the-money, The vault may incur a loss.

  • Operational and Execution Risks

  • Third party protocol risks

Vault strategy

Weekly European Call Options are sold every Friday at an auction. The strike price is selected in order to achieve a delta of less than 0.2. This is on order to minimise the likelihood of the options expiring at the money.

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Last updated 1 year ago