♾️Perpetual Options (Upcoming)

vDEX offers a new generation of option contracts where LPs provide liquidity and act as counterparties. Perpetual options will be highly liquid, straightforward enough for defi traders, and have competitive capital efficiency and spreads. The Unrealised Profit and Loss (PnL) will be computed on the same basis as for perpetual futures, which means they are on a live basis and "cash" settled in VLPs. Even though Unrealised P&L is continuously calculated, perpetual options are set to auto-settle every 8 hours. More precisely, you will automatically sell your option contract every eight hours. You then automatically post that money as a margin to get into another perpetual option with the original expiry and target price. Based on your last 8 hours' PnL and theta (time value) losses, your margin changes, resulting in a corresponding change in the quantity of options you hold. That's how we got perpetual options.

Furthermore, just like perps, CEPOs' margin and leverage can be customised to some extent, with vDEX's analytics providing guidance based on the analysis of historical market behaviours and current market dynamics. The margin/leverage function: given the amount M of VLPs a trader is willing to put at stake as collateral (or margin) on a specific trade, what is the maximum risk exposure (position size) he can take? VDEX will determine such maximal risk exposure in such a way that the probability for the trader to lose his margin over a certain period is small enough to minimise liquidation risk within that time frame:

$$P(\text{losing margin } M \text{ over time horizon } T) < \epsilon$$

For vDEX V2's Genesis period, T is set to be 8 hours and ε = 10%

For the Genesis period, the maximum leverage a trader is allowed to trade is decided by on-chain AI, giving current & historical market performance.