Dive In: Hegic — Trade like the best.

Have you watched finance movies like the Wolf of Wall Street, Devils, Industry, or other similar films and wondered how they always seemed profitable even amidst turmoil? Have you ever examined reports from Alameda research or Rennaisanace Technology and wondered why they always made some profits regardless of the market conditions? 

This is because most of these firms or professionals have access to exotic financial strategies that ensure they make money in a bull market or bear market. 

What if you had a product that gave you access to the most exotic financial strategies available in the digital market space at low cost and in a very easy-to-understand manner?

We would like to introduce you to Hegic, a DeFi protocol that offers digital asset managers and traders easy access to structured financial products. Let's take a peek into the protocol.

Before you go on to the remainder of the article, it is good to know how options work. Review this video to gain knowledge on options trading. 

Hegic —  An Overview

Hegic is a peer-to-peer options trading protocol built on Ethereum that focuses on making exotic financial instruments simple to understand. Hegic has been live since February 2020 and generated more than $1bn in options trading options with more than 11,000 options contracts traded. These are huge numbers considering that Hegic is not yet mainstream, and thus, we can see a massive demand for the products they offer and wish to introduce them to our readers. So, let's examine the products provided by Hegic. 

Products Offered 

Currently, there are only two underlying assets supported on Hegic. They are ETH and WBTC call/put options. Hegic Offers products that suit four types of market conditions, including: 

Bull market Condition 

Hegic offers four bull market strategies, including:

• Call Strategy - In this strategy, the price of the option rises if the price of the underlying product rises sharply. 

• Bull Call Spread Strategy - In this strategy, the option's price becomes profitable if the underlying asset's price reaches a certain point. 

• Bull Put Spread Strategy - This strategy allows options traders to attain profitability if the price of the underlying assets stays at a certain point.

• Strap Strategy - This strategy allows traders to make a profit if the underlying asset price rises or falls sharply during a bull market rally. 

Bear Market Condition 

Under bear market conditions, four products are available for users to take advantage of, they are:

• Put market strategies: This strategy allows users to be profitable if the underlying asset price falls sharply.

• Bear Put Market Strategy - This strategy allows users to profit if the underlying asset's price falls to a certain level. This strategy is helpful in sudden bear reversals. 

• Bear Call Spread - This strategy allows users to take advantage of price stagnation of flatlining in a bear market. Thus, the option returns a profit if the underlying asset's price stays in a particular range. 

• Strip Market Strategy - This options strategy allows users to make profits if there is a sharp fall or rise in the price of the underlying assets. 

High Volatility Market Condition 

Hegic offers two significant products that users can take advantage of in markets with violent price movements in either direction. These are:

• Straddle Market Strategy - This strategy allows traders to take advantage of sharp increases or decreases in the underlying asset's price. This strategy has a higher premium than the strip or strap market strategy but commands higher profit in both a price increase and reduction. 

• Strangle Market Strategy - This allows traders to take advantage of sharp and significant price changes in either direction. 

Low Volatility Market Condition

In times of low market volatility, when there is slight price fluctuation, Hegic offers two effective strategies: 

• Long Butterfly Strategy - This strategy becomes profitable when the underlying asset's price stays close to the strike price until the option expires. 

• Long Condor Strategy - This allows traders to be profitable if there are minimal changes in the underlying asset price. 

Benefits of Hegic

Hegic offers users four significant benefits: 

1. Users can buy and sell exotic options strategies using Hegic, all while enjoying anonymity. As a result, there is no need for KYC or AML requirements that hinder persons in underserved financial jurisdictions from enjoying access to these services. 

2. Users can access these structured financial products all in one click. Thus, users do not need to know how to create these structured products. 

3. Once the option is exercised, the net profit and loss must be paid out immediately. 

4. Users do not need to pay trading fees or taker fees. The premium cost is the only cost associated with purchasing options on Hegic. 

Layer 2 support

Hegic is currently supported on Arbitrum and Ethereum. Users can also use the playground, which is the demo version of Hegic. 

How to? 

To enjoy the structured products offered by Hegic. Go through the following steps: 

1. Select a network and wallet provider. For the sake of cheap gas fees, we currently recommend the Arbitrum network. 

1. Proceed to buy the option, selecting the underlying assets, strike price, and the holding period of the options. Hegic provides an easy-to-use profit calculator that will simulate the P & L at every price point—giving users clear insight into the dynamics of the options about to be bought. 

Users can buy strategies instead of options and stake tokens on the Hegic protocol for a decent profit. 

Final Thoughts 

It is essential to be well equipped in financial markets because it is challenging to predict how markets will turn. However, Hegic provides an excellent way to make profits regardless of how markets shift, and we encourage our readers to use this tool when constructing an investment portfolio.