A decentralized finance product that launched earlier this year to help investors profit from a sideways trending market is generating desired results.
In case of a short straddle, a trader sells bullish and bearish options contracts called call and put on a centralized exchange. If the market stays rangebound, the short straddle makes money. Setting up such multi-leg strategies is easier said than done, as traders must select appropriate levels to buy/sell options and the expiration date and actively manage the position as several factors influence options prices.
After users deposit ETH as collateral, the crab vault combines long ETH with a short Squeeth position, creating a market-neutral position. "If ETH price decreases, the strategy sells Squeeth tokens for ETH ," Prospere said. The crab, therefore, stacks ether during the bear market. While the one-click strategy to profit from potential consolidation may look appealing to retail investors, it is not without risks. As with short straddle, crab depositors stand to lose money if ether charts a violent price move in either direction.
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