11. What is the profit prospect if I am an option buyer or seller on Option Panda?
As an option buyer, you enjoy the upside or downside leveraged profit if the option you hold expires in the money.
- Example 1: If you paid 50 USDT to acquire a BTCB call option with a strike price of $35,000 which expires in 1 hour, and it expires at a price of $36,000, you made a profit of $1,000 in 1 hour. Your annualized investment return would be 1,000/50*24*365=17,520,000%;
- Example 2: If you paid 50 USDT to acquire a BTCB put option with a strike price of $35,000 which expires in 1 hour, and it expires at a price of $34,500, you made a profit of $500 in 1 hour. Your annualized investment return would be 500/50*24*365=8,760,000%;
As an option seller, as long as you didn’t sell your underwriter token, you have a share of the accumulative option premium paid by option buyers to the option underwriting pool, which is essentially the option underwriting fees. The profit you’ll receive is proportional to the underwriter token percentage you own.
- Example 3: If the BTCB Call Option Underwriting Pool has 100 BTCB asset in total, during a 15 minutes time window, it has underwriten 20 BTCB call option with an underwriting revenue of $1,000 USDT($50 premium per BTCB on average), suppose all call options expire OTM, then the annualized yield of the pool would be 1,000/15*60*24*365/(100*35,000)=10,011%. If you're an investor in the underwriting pool or you have purchased the pooler token from the market, your investment will give you an APY of 10,011%.
The APY of an underwriting pool would be higher than the above example as the pool is actually underwriting options with multiple expiry durations(15min, 30min, 1hours, 4hours, 8hours) at the same time. Therefore, APY would be the sum of all those underwriting activities.