0DTE Options vs Perps — is one better than the other?
(hint: the first option is better, no pun intended)
If you followed the recent rollercoaster in the crypto markets over the weekend of 13–14 April 2024 in the aftermath of the Iran drone and missile attacks on Israel, you’re probably aware that Bitcoin’s (BTC) price took a nosedive from $67,000 to $60,000 then slowly bounced back to the $66,000 level over the next two days. The instant and significant dips in BTC (and other token prices) that weekend triggered many margin calls and liquidated many traders— especially those who had been trading perpetual on platforms like Binance or GMX.
If you’re a frequent perp trader, you’ll most likely be familiar with the phenomenon called a ‘scam wick’ as well — defined as a quick and violent move in an underlying asset’s price that eventually settles back at the same price. ‘Scam wicks’ can also liquidate leveraged positions very quickly and are often caused by token price manipulators and price oracle hackers. Scam wicks… happen more commonly than you think.
So if perp trading isn’t exactly the safest option out there to leverage your positions and express your short-term view on the market, is there a better alternative out there?
At Jasper Vault, we think there definitely is ;)
First enter 0DTE options.
0DTE stands for zero-days-to-expiration, and so 0DTE options are options that expire within 24-hours. 0DTE options have become very popular in TradFi as of late, accounting for almost half of all S&P 500 Index options.
Now enter Jasper Vault’s take on 0DTE options: Degen Options.
Jasper Vault’s new Degen Options is an 0DTE options product that allows you to buy at-the-money call and put options on ETH and WBTC that auto-settles in a netted fashion into your self-hosted wallet exactly 8-hours after you buy the option (you buy the option by paying a small options premium).
It essentially allows users to “open” a 100x — 150x leverage position on ETH and WBTC… wait for it… without fear of any liquidation! (aka Degen Options is immune to scam wicks and any liquidation risk)
Here’s how the UI looks like:
In the picture above, you see that you have the option to either buy a call (long call) or put (long put) on either ETH and WBTC.
You can also select if you want price exposure to 0.1 ETH, 1 ETH or 2 ETH.
In the middle of the circle, by showing that the market price = the strike price, this represents that this is an ‘at-the-money’ option that you’re buying.
The “8h” under the circle represents the duration of the option.
Next, you’ll see that next to long call, there is a box showing 137x. This is the implied leverage that you are getting by buying this option.
It is calculated as such:
(Exposure to ETH x current market price of ETH) / Option premium
In this case, since we chose exposure to 1 ETH, market price is $3,856.54 and premium is 28.38 USDT,
(1 x $3,856.54) / 28.38 = 137x
And so, once you’re happy with all the parameters and think ETH will finish higher than it’s current price in 8-hours, swipe right to pay the premium, and you can track your position in your Portfolio tab.
The picture below is an example of a successful long call trade on 2 ETH exposure that earned 0.275 ETH (worth $985 USDT at the time) with just 39.99 USDT in premium. This represented a 2364% ROI.
To conclude, while perp trading is where people usually go if they want to trade with super high leverage, we’d argue that 0DTE options and especially Jasper Vault’s Degen Options is a superior alternative to trading perps on DEXs and CEXs out there. With Degen Options you can say goodbye to liquidations, margin calls and sleepless nights. With Degen Options, you get effortless leverage with limited downside risk.
Degen Options is currently live on Sei Network and Arbitrum, and we are launching options on some exciting altcoins soon.
Stay tuned!
