April 25, 2022

rDPX - 25 April 2022 - Dopex Community Token Analysis

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rDPX - 25 April 2022
The Dopex Community Analyst series is a series of strategies, ideas, opinion pieces and educational resource written by independent contributors from the Dopex community. Every month many knowledgeable community analysts share a short analyses of a coin of their choice and share these with Dopex. The goal of these articles is to empower the community and help Dopex increase SSOV volume & deposits. With these articles we hope to provide users with additional information that will help them in making an informed choice of strategy using our products.
Without further ado let’s jump into our next article.
Getting Started in Options with Lowered Risk

Summary

  • How to get started in defi options with a lowered risk method
  • Intro to farming - pros and cons
  • Growing your account while “playing with house money”

Jumping into options with Dopex’s SSOV?

First I should say congratulations. Dopex is paving the way in bringing options to defi and you get to be a part of that genesis. In a previous article I wrote, I discussed using a bull call spread to mitigate risk, and began to introduce the subject we are going to discuss today.
So you want to get started with options but are still learning about them? If this is you, try this strategy on for size: farming using rDPX-WETH LP to earn rDPX and using that rDPX to purchase your first options.
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How does it work?

You can farm rDPX and DPX through the Dopex farms, but specifically we’ll discuss the rDPX-WETH farm currently providing 105% APR. This is how you’re going to get started in options without losing any of your “original” principal. Before we dive into that, let’s talk about the pros and cons.

Pros

The rDPX-WETH farm allows you to earn rDPX and DPX from staking your rDPX and WETH with the LP tokens that you can acquire from SushiSwap. This is how we will execute the strategy we’re discussing today.

Cons

For better or worse, the more attractive products under the scope of the Dopex ecosystem become, the lower the APY will become on these farms. So if you’re interested in this strategy, the time is now to jump in. The other con is impermanent loss which you may be more familiar with. It happens when token pairs in a liquidity pool become uneven due to changes in price action from the two tokens. This loss isn't realized until you unpair your tokens, so if you can afford to leave them paired during times of great market volatility, it would be wise to do so.
While the amount of cons looks longer than the amount of pros, I believe that - withstanding IL - the pros outweigh cons especially considering the upside potential of rDPX. |

Using house money to jump into options

For this example, say you start with $10,000 invested into the rDPX-WETH pool. After a week, you would have roughly 2 rDPX in rewards built up. Without unstaking or using any of your original principal, we’ll take these two rDPX tokens and use it to buy calls in the rDPX SSOV. Depending on how comfortable you are with risk, I would recommend either the $80 strike or $120 strike because while the $80 strike options have a higher likelihood to break even and turn a profit, in the case that it doesn’t your premium is higher on the $80 strike options than they are on the $120 strikes.
Another great thing about Dopex SSOV is that they provide a profit estimation calculator making it easier than ever for a beginner to jump in. You can see exactly where rDPX needs to be for you to turn a profit. See picture below
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Final Thoughts

I hope this could help shed some light on how you can get started in the options space using Dopex SSOV and providing liquidity to the rDPX-WETH pool. The interface is simple to use even for beginners, and offers folks with less experience the opportunity to jump in and learn without much financial burden (especially if you’re using the strategy we just discussed).
So in summary: Provide liquidity to the rDPX-WETH pool, get rDPX as rewards, use rDPX to purchase call options. You learn more by doing than by reading alone, so your first step to becoming an options pro is jumping in!
 
I hope this helps you feel more confident about getting started with options. The goal is to help those with less experience gain the same opportunities as industry vets, so I hope you take the leap. If you enjoyed this and want to see more content from me, follow me @omeguhh and stay tuned for new articles as they’re released.
Views expressed in this article are the author’s own and not reflective of the position or professional views from Dopex.io.
Dopex reimburses analyst contributors with a small payout to partially compensate the time spent on research and writing. For questions feel free to jump into our discord (discord.gg/dopex) and chat with the team or analyst contributors directly.
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About Dopex

Dopex is a decentralized options protocol that aims to maximize liquidity, minimize losses for option writers and maximize gains for option buyers — all in a passive manner. Dopex uses option pools to allow anyone to earn a yield passively. Offering value to both option sellers and buyers by ensuring fair and optimized option prices across all strike prices and expiries. This is thanks to our own innovative and state-of-the-art option pricing model that replicates volatility smiles.

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