Implied Rate Around 16% Currently
LedgerSavings is an innovative interface that uses an underlying call overwrite strategy for execution on the LedgerX exchange. Given the high implied volatility of bitcoin, the current implied rate for a 2x strike call option is approximately 16% annualized.
Everyone has different time horizons and requirements. For launch, 3-month, 6-month, and 12-month maturities will be offered. Rates will vary based on market dynamics.
LedgerX is registered with the Commodity Futures Trading Commission (CFTC) as a swap execution facility and derivatives clearing organization. All USD funds are held in custody by a U.S. bank and bitcoin is held by LedgerX. Our institutional focus allows same day movement of BTC collateral and USD at a scale that is not possible on a retail platform.
LedgerSavings is a simplified version of the LedgerX interface that focuses on providing call overwrites utilizing option products already approved for trading on the LedgerX platform. A call overwriting strategy can be viewed as selling a form of insurance, whereby the option seller receives an upfront call premium for writing insurance to a buyer who wishes to gain long exposure with limited downside risk. The main risk and potential cost at expiration to the call option seller is the liability born if the underlying (bitcoin, in this case) moves above the strike price.
The LedgerSavings interface is designed to provide a better experience for long holders of bitcoin who are more focused on call overwrites than broader options trading. For example, for volatility trading, LedgerX provides risk tools such as the implied volatility of options. For long holders, LedgerSavings provides the implied rate of the call overwrite.
The LedgerSavings interface is available to all LedgerX participants. Once participants have deposited BTC, they can enter in sell limit orders on the central limit order book for those contracts. As with any limit order on the LedgerX platform, there is no guarantee of execution and the order is executed in price-time priority on the central limit order book.