ran the numbers on TermMax Alpha Market before posting, because "no liquidation risk" sounds nice until you check what you're giving up for it.
say Max Cost is quoted at 8% of notional for a long position. That's not a fee — it's your entire premium, paid upfront, and also your max loss if you're wrong. Compare that to looping the same trade on a normal fixed-rate borrow:
cheaper most days, but one bad move and you're facing liquidation instead of a loss you already knew going in. Alpha Market flips the trade-off — you're not paying for leverage, you're paying to kill the tail risk.
breakeven math people skip: at 8% Max Cost, the underlying has to move more than 8% in your favor before you're actually profitable, not just directionally right. Same math a covered-call seller runs, just flipped to the buyer's side.
The part that stands out: the seller isn't a market maker pricing implied vol, it's a Dual Investment counterparty earning yield for taking the other side, settled through the same physical-delivery rails TermMax uses for defaulted loans. The "options market" is really their lending infrastructure repurposed, not a separate product bolted on.
Still don't know where Max Cost pricing actually comes from — curator-set like the vaults, or algorithmic off realized vol? If anyone's traced it, drop it below.
#termmax @TermMax
say Max Cost is quoted at 8% of notional for a long position. That's not a fee — it's your entire premium, paid upfront, and also your max loss if you're wrong. Compare that to looping the same trade on a normal fixed-rate borrow:
cheaper most days, but one bad move and you're facing liquidation instead of a loss you already knew going in. Alpha Market flips the trade-off — you're not paying for leverage, you're paying to kill the tail risk.
breakeven math people skip: at 8% Max Cost, the underlying has to move more than 8% in your favor before you're actually profitable, not just directionally right. Same math a covered-call seller runs, just flipped to the buyer's side.
The part that stands out: the seller isn't a market maker pricing implied vol, it's a Dual Investment counterparty earning yield for taking the other side, settled through the same physical-delivery rails TermMax uses for defaulted loans. The "options market" is really their lending infrastructure repurposed, not a separate product bolted on.
Still don't know where Max Cost pricing actually comes from — curator-set like the vaults, or algorithmic off realized vol? If anyone's traced it, drop it below.
#termmax @TermMax