I used to see dual-currency products displayed with high APYs, and I would always unconsciously treat them like a high-yield deposit. @TermMax TermMax Alpha’s Dual Investment is actually closer to selling options: depositing USDT provides liquidity for the Put buyer; depositing the token provides liquidity for the Call buyer. The Premium I receive is the price I pay for the obligation to perform the conversion.
I liken it to first collecting an insurance premium, then signing a commitment to trade at the strike price. When the USDT vault expires: if the market price is lower than the strike price, the funds will be exchanged into the token at the strike price, and I bear the downside risk from having bought at a higher price. When the token vault expires: if the market price is higher than the strike price, the token will be exchanged into USDT at the strike price, and I give up any further upside potential. You can receive Premium on both sides, but the direction of the risk you take is completely opposite.
So I don’t just look at the numbers for returns. Whether the strike price is truly the price I’m willing to buy or sell at, whether I’ll need this capital before maturity, and whether the underlying’s volatility might exceed the Premium by a lot—these are the key factors in judging a TermMax Dual Investment. The official also notes that points rewards will change with the promotion and cannot be treated as stable cash flow. It makes the seller’s obligations easier to manage operationally, but it doesn’t take those obligations away. The moment I receive the Premium, the risk contract has already been signed.
#termmax
I liken it to first collecting an insurance premium, then signing a commitment to trade at the strike price. When the USDT vault expires: if the market price is lower than the strike price, the funds will be exchanged into the token at the strike price, and I bear the downside risk from having bought at a higher price. When the token vault expires: if the market price is higher than the strike price, the token will be exchanged into USDT at the strike price, and I give up any further upside potential. You can receive Premium on both sides, but the direction of the risk you take is completely opposite.
So I don’t just look at the numbers for returns. Whether the strike price is truly the price I’m willing to buy or sell at, whether I’ll need this capital before maturity, and whether the underlying’s volatility might exceed the Premium by a lot—these are the key factors in judging a TermMax Dual Investment. The official also notes that points rewards will change with the promotion and cannot be treated as stable cash flow. It makes the seller’s obligations easier to manage operationally, but it doesn’t take those obligations away. The moment I receive the Premium, the risk contract has already been signed.
#termmax