Guide to Avoiding Pitfalls in "Dual Coin Investment" and "High Selling" At the beginning of the month, I wrote two articles about CEX's "dual currency investment", and I myself had just fallen into the trap at that time. Two weeks have passed now, and I have accumulated a little bit of experience, so I plan to organize a "pit avoidance guide" for myself to avoid accidentally falling in and getting bruised and swollen. However, due to limited practical experience, there may be numerous mistakes, so we kindly ask the experts not to hesitate to provide guidance. one ️⃣ The underlying logic of 'high selling' The "dual currency investment" (or dual currency wealth management) of the exchange is based on the operation of "selling options", and your identity is the option seller. Sell high=(holding spot) Sell call option=covered call option Buy low=(hold stablecoin) sell put option That is to say, you are not selling options naked, so you will not liquidate your position. But there is still a risk of "loss", which will be explained in detail later. two ️⃣ Trap 1: Temptation of High APY For example, if you open the ETH high selling page, you are likely to see APY data of up to 300%+. This is like a pie in the sky, you might think so. But wait a moment. If you really choose to open a position and sell at this price range (shown in the screenshot as 3900,+0.32%), what will happen when the settlement is made at 4:30 pm tomorrow afternoon? High probability: ETH price far exceeds your settlement price of 3900, such as 4000 on the platform So let's calculate your gains and 'losses'. 1. Revenue: 342%/365 * 1=0.94% 2. Loss: (4000-3900)/3900=2.56% In other words, you exchanged a loss of -2.5% (opportunity cost) for a gain of+0.94%. So one thing to keep in mind is to strike a balance between exercise price and APY, rather than blindly pursuing the highest APY. three ️⃣ Trap 2: Automatic Repeat/Fixed Ratio The so-called fixed ratio refers to choosing a fixed markup ratio every time you open a warehouse. For example, every time you choose to open a position at the current price plus 5%. The logic of automatic resubmission is similar. This operation method ignores the current market price fluctuations. If your markup ratio is too low, it is easy to be exercised in high volatility situations; On the contrary, the yield is too low. Because even with the same markup, such as+5%, APY data varies greatly in different market conditions. four ️⃣ Trap 3: Ignoring IV data This is consistent with the previous one. The so-called IV is a crucial concept in options: implied volatility. When the IV is high, selling options yields higher returns. At this point, you can simultaneously earn returns from volatility regression (decrease) and time decay. I usually view real-time IV data on Deribit. For example, the real-time ETH IV is 44.2%, while my IV when I opened the position on Friday was 107%. When the natural IV is high, the APY is also high. But I lost the wrong price by hand skating that day, which is another sad story 。 ） five ️⃣ Trap 4: The bull market continues to sell CALL Sell CALL=Sell call option=Do you think the price won't rise significantly The biggest risk of this operation is opportunity cost. That is to say, if the price you have chosen is exercised and continues to rise, it is equivalent to missing out on a significant upward trend. And what you have gained is only about a fraction of the daily income. If you believe that the price will continue to fall, you can only use a "buy low" strategy (i.e. selling put options) to find a way to repurchase the asset. six ️⃣ summary Dual currency investment is not a low-risk, high-yield way of "financial management". As an option seller, the more familiar you are with the underlying operational logic, the lower your likelihood of falling into a trap. The biggest risk of 'high selling' lies in selling in the air, which is the biggest opportunity cost. The method of selling options itself determines: 1. Long term sustainability 2. Stable income 3. Non high-risk gambling My level is average and I am still in the exploratory stage. I can take the above content as my learning summary. Let's all improve together. The above.