Options trading for mAssets

Hola amigos

What are your thoughts about options trading on mAssets?
I have a background in programming and also traditional finance. I was thinking about an options protocol on top of mAssets, how much trading volume and interest it would attract? I share my own thoughts later in post.

Also I would appreciate it if someone from mirror developers gave me estimate headcount of mirror. And how much time did it take them to build mirror? can a small team of devs build an options protocol on top of mir? I might be able to gather a team.

My thoughts on options trading for mAssets:

Pros

  • Fund managers and advanced traders can implement better trading strategies (i love options personally more than leveraged trading)
  • it helps other protocols like spar
  • similar value proposition to mirror(the same people that dont have cheap and direct access to stocks, also dont have access to options)
  • fund managers and maybe anchor protocol might be able to use otions to implement risk free and low profit strategies (e.g selling calls while holdig the underlying assets)
  • Eth ecosystem has high cost which might prevent mainstream adoption in short term. Mirror has low costs and can gain user base much easier.
  • if we port alt coins to mirror, similar to stocks and pre ipos, we might be able to attract option trading volume on long tail tokens.

Challenges

  • It is not clear what is the best model for an options protocol technically. There is hegic, opyn, pods, finexus, … on eth ecosystem. They are not mature yet.
  • it might be hard to attract liquidity for options. Advanced market makers are needed probably. It is a chicken and egg problem.
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The biggest challenge here is coming up with a sufficiently robust model for decentralized products.

We are currently actually looking at a wide variety of derivatives products including options right now, but if you had any ideas and wanted to build something with it, please let me and the rest of the Mirror team know. :smiley:

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I m interested. Whom should I contact to chat a bit? and how? :smiley:

Something I was thinking in the moment I found out about Mir is this will work lovely with options. I want to mention a very good ‘relatively’ simple implementable solutions from eth ecosystem called Hegic. It has a central liquidy pool from which the options are being purchased as fixed maturities for example 1d,7d,14d,28d and those could be exercised anytime until expiry. LP providers in this set up are the ones short options ( so they are also the ones collecting the premiums). Lol this could work lovely paired with an oracle getting the real life Mstonks implied Vols from the respective option exchanges.

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Hi - we have been looking at a lot of similar options protocols, and there are a still few things to be considered even if we were to follow a Hegic-style mechanism:

  • Underliers
  • Types
  • Pricing (Oracle/AMM/some other method)
  • Liquidity (Pooled, AMM, Order book)
  • Collateral ratios
  • Collateral type
  • Settlement (Physical, cash)

List is non-exhaustive, so we will probably have to push this out in v2.

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You can add me on TG @sihyeok

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I’m excited about the potential of mFutures & mOptions as well. Will this desire be partly satisfied by Injective Protocol + Covalent launches soon or will there still need to be a build-out of a decentralized mDerivatives liquidity/market maker aspect?

In addition to the benefits you listed of adding mOptions to the mAsset Trader’s toolbox, I think mFutures would be very interesting. For instance, mirrored/synthetic commodities futures would be appealing even to U.S. persons since the amount of margin/collateral required by CME/CBOE to trade futures is a barrier to entry for U.S. retail stakeholders. Providing access to parallel Corn/Wheat/Cattle/Hog/Milk/Sugar/Lumber/Rice futures contracts would allow smaller farmers/producers to hedge their production. Possibilities are endless here!

Although there are multiple contract expiries / lot sizes / liquidity issues (wide bid-ask spreads)
/ Phys or Fin setts / etc. that generate more difficulties in deciding on a liquidity/collateral model, building a mirrored F&O product suite would be a nice addition to a Mirrored Asset Portfolio.

Appreciate any insight you may be able to offer. Thanks

Lots of considerations to make and lots of other improvements to be made for Mirror v2, but don’t worry - I will make whatever mAsset’s synthetic work, and one day we will see complex products like variance swaps on Mirror. This is like a v3 thing maybe (?) if we want to develop a robust mechanism.

One approach is to build an open platform to allow any contract writing specifying input parameters.

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