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Moret provides Leveraged Perpetuals on the back of its powerful AMM option exchange. There are four sets of leveraged perpetuals:
- 1.3x long BTC or ETH, which buys rolling 1 month call options with strike at 75%-80% of spot price and notional of 3.5 times the investment amount. The leverage ranges from 2.0x to 4.0x.
- 2.3x short BTC or ETH, which buys rolling 2-week put options with strike at 120%-125% of spot price and notional of 3.5 times the investment amount. The leverage ranges between 2.0x to 4.0x.
In order to keep the leverage at designed range, the option is automatically rolled to a new 1-month trade whenever two things happen:
- People invest in or divest from the perpetuals, which is done atomically in the investment/divestment process.
- When the leverage falls below the lower bound or rises above the upper bound, a rebalance can be triggered by anyone. The bot who runs the rebalancing is incentivised with a fee worth 10% APY on the total TVL of the perpetual which can be sizeable.
Both price movement and time passage will have impact on the level of leverage. Because options provide the source of leverage, the level of implied volatility is also a determining factor. The higher the volatility is, the lower the absolute level of leverage would be, which also gives traders the opportunity to trade volatilities on top of the volatility tokens which will be explained later.
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Leverage under different Implied Volatility levels