Source: OKX

For most users, options products are difficult to understand and even if they are good, they won't know how to play.

As an effective hedging tool, options can help users lock in maximum risk and pursue higher profits. They have a wide range of institutional and professional users in the traditional financial sector. However, in the relatively early stages of the cryptocurrency industry, there is still room for scale development and liquidity improvement. Currently, there are more non-financial professional users in the cryptocurrency industry, and the non-linear return curve characteristics of options and more professional pricing models have led to higher trading thresholds, which cannot meet their needs.

Addressing the above pain points, on November 15th, OKX announced the launch of a new product called "Profit Hunter" based on options. In terms of overall style, the product reduces user understanding threshold through a simple and clear graphical profit curve. In terms of trading experience, it simplifies the order placement process for option sellers and displays profits in an annualized form, reducing user participation threshold and allowing novice users to easily earn high annualized returns.

In plain terms, OKX Yield Hunter is as simple as a financial product, and in the future, users can easily participate in options. The launch of OKX Yield Hunter reduces the participation threshold for encrypted options products and will bring in more new users.

Analysis of OKX Yield Hunter

OKX Yield Hunter is a non-guaranteed trading product that helps users achieve higher annualized returns. Its underlying product is built on selling options contracts, and users receive premiums when they invest in Yield Hunter. The user's profit depends on the relationship between the expiration price and the target price. Users can choose between two products based on their own market judgment: "earn when it doesn't rise" or "earn when it doesn't fall".

For example, for options products with BTC and ETH as underlying assets, including BTC not rising but earning, BTC not falling but earning, ETH not rising but earning, and ETH not falling but earning, users can choose investment products that suit them. After placing an order successfully, they can hold it until maturity and wait for settlement or close it early.

OKX Yield Hunter presents its product returns in the form of estimated annualized interest rates, making returns clear at a glance. In terms of participation, the product offers a "invest U earn U" model, allowing users to earn coins by investing coins and eliminating the cumbersome exchange process. In terms of product selection, users can flexibly choose the target price range, maturity date, and yield rate of the underlying asset, making it very flexible. In addition, OKX Yield Hunter also provides leverage of 1-X times to increase capital utilization, among other features.

Through OKX Yield Hunter, users who do not have the ability to construct multi-legged option asset portfolios to achieve profit targets, have unclear pricing and profit characteristics of options, and do not know how to choose options based on what dimensions can easily participate. OKX reduces the participation threshold for users from multiple aspects such as user understanding and participation, greatly improving convenience and operational experience.

In addition, it is worth noting that OKX Yield Hunter not only significantly reduces the participation threshold of option products in terms of product experience, but also provides users with relatively high annualized returns. Although it is not guaranteed, the estimated annualized interest rate displayed by the product is higher than that of general financial products. How is this achieved?

To answer this question, first we need to have a basic understanding of options.

One Picture to Understand Options

Options are a type of choice, which is the right to buy or sell a specific commodity at a specific price at some point in the future.

There are many options strategies, such as collar options, seagull options, bull spread and bear spread options, etc. These seemingly complex and obscure options are mostly composed of very ordinary single strategies. Single strategies can be bullish or bearish, mainly including buying call options, buying put options, selling call options, and selling put options.

Combining with the following sketches, let's briefly analyze the four simple option strategies and their risks and returns. The horizontal axis represents the price of the underlying asset, and the vertical axis represents the return. A is the exercise price, and P is the premium. Taking buying call options as an example, if Zhang San buys BTC call options with an exercise price of A at a premium of P, it means that on the expiration date, Zhang San has the right to buy BTC at the price of A.

If the BTC price on the expiration date is greater than A, theoretically, you can earn as much as the BTC rises, and the profit is unlimited. However, in reality, considering the premium P as the cost, you can only start to make a profit when the BTC price on the expiration date is greater than A+P. But no matter how much it rises, Zhang San can make money by buying BTC at A price, so he can exercise the right. If the BTC price on the expiration date is less than A, theoretically, you will lose as much as the BTC falls, and the loss is unlimited. However, Zhang San can give up the right to buy BTC at A price, which means losing the premium P, and the loss is limited. The same applies to others.

OKX's Yield Hunter is built on the basis of selling options. As shown in the above figure, the types of options sold under the single strategy include selling call options and selling put options. Selling call options means that if the BTC price rises, you will lose money, but if it doesn't rise, you will earn the premium P. Selling put options means that if the BTC price falls, you will lose money, but if it doesn't fall, you will earn the premium P.

Selling type options may earn the premium P with a high probability, but the premium P (option price) of the option is determined by multiple factors such as the underlying asset price, exercise price, underlying asset price volatility, remaining time, and interest rate. These factors can affect the value and trading price of the option. Taking the underlying asset price volatility as an example, considering the limited loss and unlimited profit characteristics of option trading, if the underlying price fluctuates more violently, the higher the profit will be if the direction is correct, and the controllable loss if the direction is wrong. Therefore, the higher the volatility, the greater the value of the option.

Currently, there are numerous options strategies available in the market. Through diversified combinations and calculations, they can be applied to various market conditions, even achieving profits while ensuring capital preservation. This is why OKX Yield Hunter is a non-guaranteed trading product that helps users achieve higher annualized returns.

OKX creates a minimalist trading tool

Options, like futures, are derivative instruments that serve functions such as risk management, price discovery, and asset allocation. However, compared to futures, options offer the advantage of being able to form a variety of strategies through combinations, as well as the ability to calculate risks in advance.

However, for many users in the cryptocurrency industry who are accustomed to spot or contract products, the threshold for getting started with option products is relatively high. Through OKX Yield Hunter, users are provided with an extremely convenient and effective hedging tool, which will help popularize option products in the cryptocurrency industry.

Currently, OKX's financial products are in a leading position in the industry. During the past two years of bear market conditions, they have become the preferred tool for users to hedge risks and earn stable returns.

Looking at OKX's financial products, whether it's the current income hunter or previously launched products like Dual Currency Yield and Shark Fin, they are constantly innovating to simplify trading tools and lower user barriers, in order to provide the ultimate trading service.

After all, "simplicity is the ultimate complexity, because simplicity leads to efficiency."

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