The successful deployment of the Price History contract marks a key milestone towards bringing Yield Harbour's innovative decentralized options platform to mainnet.
Let's continue building the future of decentralized finance together!
We are excited to announce that Yield Harbour has officially submitted a governance proposal to initiate the deployment process to Kujira mainnet. This proposal seeks to deploy the Price History contract, which will record on-chain asset prices every 30 minutes.
So by analyzing the volatility skew, traders can gauge the market's expectations about potential extreme moves. They can then position their options trades accordingly to try to capitalize on or protect against those expected volatility scenarios playing out.
It's like the options market is saying "We think there's a higher probability of this stock shocking us with an extreme move, rather than just calmly staying around its current level."
This skew or asymmetry in volatilities exists because the options market is pricing in a higher chance of the stock making a really big move in either direction by expiration, compared to a smaller/moderate move.
Typically, the implied volatilities for options with strike prices far below or far above the current asset price tend to be higher than at-the-money options.
When you look at options prices for a given asset and expiration date, you'll notice that the implied volatilities (which drive the options premiums) are not the same across all strike prices. This unevenness in implied volatilities across strikes is called the volatility skew
What happens if you buy both a call and a put option on the same asset with the same strike price and expiry date?
This strategy allows you to profit from a large price move in either direction, The minimum cost is the premium paid if the price stays relatively flat. #DeFi $KUJI
Fischer Black (1938-1995) was a brilliant economist who co-developed the revolutionary Black-Scholes options pricing model. His groundbreaking work on options theory and derivatives earned him the Nobel Memorial Prize in Economics in 1997, awarded posthumously. #Options $KUJI