A profitable option can have two valid exits and two different sources of execution risk.
TermMax Alpha supports Exercise — Net Settle and Exercise — Delivery.
Net Settle calculates the profit and settles it in the chosen asset. It is operationally simple, but a large trade routed through limited on-chain liquidity can face slippage or MEV exposure.
Delivery transfers the exercise economics more directly:
• a Long buys the underlying at the strike with USDT;
• a Short sells the underlying at the strike;
• the user can then complete the offsetting trade in another, potentially deeper market.
Delivery can reduce dependence on one DEX route, but it gives the user more execution work: venue risk, transfer time, gas and the price available for the external trade.
My rule would be size-dependent. For a small position in deep on-chain liquidity, convenience may dominate. For a large position, I would compare the expected net proceeds of both routes before exercising.
Same option profit, different path to realizing it.
Sources checked: TermMax Docs — Exercise — Delivery; Long/Short.
#termmax @TermMax
TermMax Alpha supports Exercise — Net Settle and Exercise — Delivery.
Net Settle calculates the profit and settles it in the chosen asset. It is operationally simple, but a large trade routed through limited on-chain liquidity can face slippage or MEV exposure.
Delivery transfers the exercise economics more directly:
• a Long buys the underlying at the strike with USDT;
• a Short sells the underlying at the strike;
• the user can then complete the offsetting trade in another, potentially deeper market.
Delivery can reduce dependence on one DEX route, but it gives the user more execution work: venue risk, transfer time, gas and the price available for the external trade.
My rule would be size-dependent. For a small position in deep on-chain liquidity, convenience may dominate. For a large position, I would compare the expected net proceeds of both routes before exercising.
Same option profit, different path to realizing it.
Sources checked: TermMax Docs — Exercise — Delivery; Long/Short.
#termmax @TermMax
