Go beyond off-the-shelf strategies by using programmable contracts for unique payoffs, automation, and compliance.
Traditional options strategies are limited by what the venue or broker offers. In crypto, smart contracts unlock the freedom to build, automate, and enforce any options structure you can imagine.
Today, we look at how programmable logic powers custom strategies on Derive and similar platforms, giving you an edge that simply is not possible in legacy systems.
1. Custom Payoff Profiles
- Composable contracts: Smart contracts can combine calls, puts, and multi-leg structures into any shape you want.
- Exotic structures: Build Asian options, barrier options, or path-dependent payoffs with deterministic logic.
- Open-source templates: Fork, audit, and deploy contracts to suit your needs.
Example:
Build a covered call that auto-rolls or a knock-in/knock-out option that triggers based on on-chain price feeds.
2. Automated Risk Management
- Enforce margin and collateral logic: Contracts can require collateralization before execution, ensuring risk is always covered.
- Liquidation automation: Smart contracts monitor and trigger liquidations without human intervention.
- Automated hedging: Integrate with DEXs, perps, oracles, or lending platforms to auto-hedge exposure.
On Derive:
Hooks, custom rules, and integrations with oracles allow live enforcement of margin, liquidation, and payout conditions.
3. On-Chain Compliance and Permissions
- Role-based access: Grant or restrict permissions for trade, settlement, or admin functions.
- Whitelisting: Only allow KYC/KYB-verified wallets to interact with certain contracts or assets.
- Auditability: All contract logic, events, and state changes are transparent and available for external verification.
Example:
Deploy a structured product available only to verified DAOs or institutions, with real-time audit trails.
4. Workflow Automation
- Scheduled execution: Contracts can trigger actions based on time, price, or oracle events.
- Batch actions: Roll, settle, or rebalance large books with a single transaction.
- Programmatic notifications: Alert users or admins to risk, margin, or trade events automatically.
On Derive:
Plug into automation hooks for vaults, risk managers, and compliance engines.
Your Action Today
- Review smart contract templates for options strategies on Derive or open-source platforms.
- Sketch your own custom payoff or risk rule and imagine how you would automate it.
- Test on-chain workflows in a testnet or sandbox environment before deploying live capital.
- Think about which parts of your trading workflow could benefit from automation or programmable enforcement.
Tomorrow, we move into automated market making and liquidity provision for options, giving you a view of how protocols manage risk and fill orders behind the scenes.
Coming tomorrow:
Day 40 – Automated Market Making for Options: Liquidity on Chain
Hasta manana
Cpt
CptRandlelwa
