Capital Efficiency in Crypto Options

Kyan empowers users to deploy custom multi-leg strategies, hedge positions using perps, and maximize efficiency with less locked capital.

We know that success in trading isn’t just about choosing the right direction. It's also about managing capital effectively. Kyan (Premia V4) places capital efficiency at the core of the trading experience, helping users get more out of their margin without sacrificing safety, thanks to portfolio margin.

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What is Capital Efficiency?

Capital efficiency refers to how effectively traders can use their available capital to open and maintain positions.

A capital-efficient platform lets traders scale their exposure or diversify their strategy without requiring unnecessary collateral. This is especially important in derivatives markets, where margin requirements can significantly impact profitability and flexibility.

Thanks to capital efficiency, Kyan users are able to put their funds towards larger or additional positions, increasing their leverage. Underwriters are able to offer more bids and asks across different strike prices and expiries. This significantly boosts overall liquidity on Kyan, making it easier for traders to find counterparties and execute their strategies.

Capital Efficiency on Kyan

Hedged Positions

With portfolio margin, traders are able to reduce their collateral requirements by opening additional positions with opposing risk profiles, as the system evaluates the net exposure of the entire portfolio rather than requiring full margin for each isolated position. In isolated systems, these would still require full margin individually. This is where portfolio margin truly shines.

Multi-Leg Options Strategies

Combo options strategies like straddles, strangles, spreads, and iron condors, typically involve multiple legs that together define a capped risk-reward structure. Without portfolio margin, every leg within the strategy would require its own full collateral.

For example, a call spread or iron condor has defined max loss, but under isolated margin, each leg would still require full margin. With portfolio margin, the risk is calculated for the entire portfolio, so the collateral requirements will be reduced.

Kyan takes the multi-leg trading experience a step further and introduces the Combo Builder: an intuitive and customizable tool for creating combo strategies.

More on the Combo Builder coming soon!

Thanks to the reduced collateral requirements, Kyan can support more sophisticated strategies, attract institutional and advanced retail users, and drive deeper liquidity.

Read this article to find out more about multi-leg strategies on Kyan.

Less Collateral with Portfolio Margin

In an isolated margin system, each position requires its own dedicated margin. Because risk is evaluated on a per-position basis, capital is not shared across different strategies. This setup can often lead to higher overall margin requirements when multiple positions are held simultaneously.

However, a portfolio margin system assesses the risk across the entire portfolio, recognizing when different positions offset each other. This significantly reduces margin requirements (especially for hedged or multi-leg strategies), unlocking more capital for additional trades or yield opportunities.

With portfolio margin, Kyan recognizes the overall risk of a portfolio and lowers the total margin requirements accordingly.

To learn more about how portfolio margin compares to isolated margin, check out this article.

Conclusion

Kyan is setting a new benchmark for capital efficiency in crypto options trading by combining portfolio margin, advanced risk modeling, and seamless support for multi-leg strategies.

Capital efficiency in crypto options has trailed CEXs due to technical limitations and risk management constraints. Many decentralized options protocols have implemented isolated margin systems, which lead to overcollateralization, especially for multi-leg or hedged strategies, making it capital-intensive and inefficient for sophisticated traders. Portfolio margin is a game-changing upgrade in this space; only the net risk matters, freeing up capital that can be redeployed elsewhere.

Efficient use of capital can be the difference between sitting on the sidelines or seizing opportunity. With portfolio margin, Kyan helps traders minimize collateral requirements, reduce risk, and unlock powerful combo strategies, all while keeping capital working harder.

Questions about Kyan (Premia V4)?

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