Greetings my beloved short time frame volatility traders and welcome to Zero Day to Expiry (0dte) options. To my beloved guests that have not heard of me, I am Dopex’s Chief Education Officer who shall be walking you through how to provide liquidity and trade volatility using this nifty little product.
If you have not familiarized yourself with how 0dte’s work, please refer to our 0dte explainer.
First things first, please head to the 0dte site here, which will look something like this
Now, feel free to head on to whichever section is applicable to you!
0dte Liquidity Providers
As an 0dte liquidity provider, you are providing call or put option liquidity from 0-20% OTM from the current spot price. You will earn premiums from option buyers and pay settlement if the options are ITM.
1. Select the ‘LP’ tab
From the right hand box, select the ‘LP’ tab.
It should look something like the above.
2.Select ‘USDC’ or ‘WETH’
You can now select USDC or WETH as your deposit token.
If you deposit USDC, you are providing liquidity for put options.
If you deposit ETH, you are providing liquidity for call options.
3. Deposit liquidity
Enter the amount of liquidity you would like to deposit.
Click the deposit button (you will first need to approve the transaction).
Congratulations, you are now providing 0dte option liquidity!
When you LP on 0dtes, you will have a withdrawal cooldown period of 1 epoch.
1. Go to ‘Withdraw’ from the ‘LP’ tab and withdraw your deposit
Click on the ‘Withdraw’ tab. Your balance and the liquidity available to be withdrawn will be shown. Enter the amount of LP tokens you would like to withdraw.
Click the ‘Withdraw’ button (you will first need to approve the transaction).
Congratulations, you have successfully withdrawn your liquidity!
As an 0dte trader, you are purchasing option spreads. You will pay an upfront premium but earn settlement if the options expire ITM. Since these are spreads rather than naked options, your payoff will be capped based on the difference between your long and short strike (refer to 0dte explainer <link to 0dte explainer> for more details>.
1. Go to the 0dte selection box
Scroll down and find the 0dte selection box which will look something like below.
Options that are above the green number (the current spot price) are calls whilst the options below are puts.
2. Select your long strike
Select the strike you want to long.
For call options (like in the above image), the price at expiry must be higher than this value for you to earn settlement.
For put options, the price at expiry must be lower than this value for you to earn settlement.
Click ‘Long’ to select your long strike.
3. Select your short strike
Select the strike you want to short.
The short strike must be more OTM than your long strike (higher for calls and lower for puts) - note in the image above that the less OTM $2,100 strike cannot be selected.
Your short strike defines where your payoff will be capped (Max Payoff = Long Strike - Short Strike [for puts] OR Short Strike - Long Strike [for calls]).
4. Select the number of option spreads you would like to purchase
After selecting your long and short strikes, go to the box in the top right corner and enter the amount of spreads you would like to purchase.
Note that the diagram highlights your max payoff per spread purchased.
Click ‘Open Position’ (you will first need to approve the transaction).
Congratulations, you have successfully purchased an 0dte option spread!
5. Exercise ITM Option Spread
You will see a section for ‘Open Positions’ at the bottom of the page.
If your position is ITM at expiry, you will be able to exercise your option. Simply click ‘exercise’ to claim your settlement rewards.
Hopefully this walkthrough has been so-called “beneficial” to my budding 0dte trader extraordinaires.
If anyone has any questions, feel free to message 0xSaitama directly and he will be sure to help you out.
Until next time, my budding students.
CEO (Chief Education Officer, not to be confused with Chief Executive Officer)
BACKS TO THE WALL
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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