What options strategy is traded?

Bond + Options Vaults

TLDR:

  • Fixed coupon notes (FCN) are a type of exotic option structured product that has both equity option and bond-like characteristics

  • Investors earn high, daily yield payments on their deposited capital until the FCN expires/matures

  • At expiry, the initial deposit is returned to investors in full if the price of the FCN's linked crypto assets have not fallen by a significant amount (e.g. 50% or more)

  • FCNs are valuable investments for investors seeking superior yields, lower risk, and who are positively or moderately bullish on the price of the underlying crypto assets

FCNs behave like bonds because ...

  • Investors give capital (aka "principal") to the note issuer who promises to pay yield ("interest") periodically and return the initial investment when the note matures/expires

  • There is a periodic yield payment ("coupon") that is a predetermined, fixed amount

FCNs behave like equity because ...

  • The value of the FCN is linked to the price performance of underlying crypto assets and when asset prices are down significantly, the principal experiences loss of value

Terminology/Jargon

  • Coupon - the yield that you are making daily on the position.

  • Principal - the initial amount that you stake into the vaults

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