Proposal to add Cally (launching in next couple weeks) as a trial strategy to sell calls (1 epoch, at most 3 PUNKs or equivalent at risk)
Cally is developed by the creators of Putty. Call selling fits into Floordao’s overall treasury strategy as an alternative to NFTX yield, which enables generation of ETH that can be used for for pairing with NFTX collections to LP, operational flexibility, and diversifies our treasury revenue streams.
The proposal calls for a trial period to put up to 3 PUNK (or equivalent) at risk in call selling with plan to debrief and analyze, upon which we expect to gradually scale up to much larger and all other supported collections.
Selling calls makes sense for floordao as it enables us to generate ETH, and in the event we are exercised, the remainder of our inventories likely have increased in value, and we make NFTX trading fees (and future univ3 LP fees). It also provides revenue if our treasury assets go down or the market is not very volatile and trading dries up.
- selling premium too cheaply to counterparties with insider info (airdrops, roadmap updates, etc.), probably not big risk with “boring”, old PUNK
- not participating in price action above the strike price
- collecting premium from selling calls
Proposed Trade Parameters
(As of 6/14/22 8pm EST)
Uses the vol calcs out of the box from the calculator, adjusts for spot listed on calc vs the ‘spot’ of PUNK, assuming we use PUNK directly…
PUNK spot current is 47.58
2.5 eth 07d → 46.7 reserve
2.5 eth 14d → 47.8 reserve
2.5 eth 30d → 50 reserve
Feel free to leave comments on doc/params