June 6, 2022 vladimir

Option trading, Option Strategies, and Market Makers Review

Often times the term options trading may sound very exotic or even complex to understand for traders who are newly exposed to this financial instrument. In essence, an option is a contract that allows, but doesn't require, a trader to buy or sell an underlying instrument like a security or an asset like Bitcoin at a predefined price over a specific period of time.

What Are Option Strategies?


Option strategies are the coinciding buying or selling of one or more options that differ in one or more of the options’ variables. Call options or Calls give the buyer the right to buy a single asset, a stock or an ETF at that option’s strike price.


What is the Role of Market Makers in Options Trading?


Market makers’ undertaking is to provide liquidity, depth, and spread among markets. The role of market makers in the option trading and options exchanges is to ensure that the markets run smoothly by enabling traders to buy and sell options even if there are no public orders to match the required trade. In order to be able to do this, market makers are usually required to maintain large portfolios and a range of different options contracts.


Due to the exponential growth of decentralized finance and the cryptocurrency exchanges(both centralized and decentralized) the need for liquid markets has grown too. Avatea taps into this new industry and expects all decentralized projects to move to fully decentralized market making protocols. 


The Avatea Protocol is designed to enable a decentralized multi-chain algorithmic market making and vesting protocol that provides immense utilities to projects and individuals. The Avatea Protocol can be seen as a token management system, assisting early stage as well as later staged crypto projects.

One of the most important goals of Avatea, is to decentralize market making processes and to offer community governance possibilities to projects. These governance possibilities are aimed at community governed market making strategies and structure. As well as sustainable trading, governing the amount of tokens that are sold or bought by a project, and the liquidity providing details. Avatea thus enables projects to create transparent and community governed activities, from activities that have always remained very centralized. This will create a new decentralized layer to crypto projects and will further improve the trust and transparency of crypto projects.


You can learn more about the Avatea protocol and how it works here.


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