🔱CEPSOs

CEPSOs are a new type of spread trade created by vDEX, building on their constant expiry perpetual options (CEPOs).

A spread trade combines two different options contracts - typically calls and puts at different strike prices. The most common is a bull call spread, combining a long call option with a short call at a higher strike.

CEPSOs work similarly, but use the unique CEPO structure. There is one leg with an at-the-money CEPO, and a second leg with an out-of-the-money CEPO.

For example, if Bitcoin is trading at $10,000, a CEPSO might combine:

• Long 1x CEPO call struck at $10,000

• Short 1x CEPO call struck at $12,000

The trader deposit margin for this spread. Their max loss is capped at the difference in the strike prices, minus the premium paid. But they have uncapped upside if Bitcoin rallies above the higher strike.

Like regular CEPOs, the CEPSOs provide rolling expiration dates and concentrated liquidity. But the spread structure limits downside risk. Traders can benefit from volatility while defining their maximum loss.

CEPSOs aim to make spread trading more accessible. The defined-risk structure and perpetual expirations allow traders to benefit from volatility over any timeframe they choose.