LBTC Vaults

Michael Spain

• 3 min read
LBTC Vaults

TL;DR:

  • Maxi Strategy: Earn yield in down, sideways, or up markets by selling put spreads with capped downside risk.
  • Safe Harvest Strategy: Earn yield in up, sideways, or down markets by selling call spreads while retaining potential gains.
  • Benefits: Generate passive income on your LBTC holdings with controlled risk.
  • Get Started: Visit our Vaults Help Center to learn more.

Are you looking to make the most out of your crypto holdings, no matter which way the market moves? Lombard Finance is excited to introduce two straightforward strategies using our LBTC vaults that help you earn yield whether prices go up, down, or stay the same. Let's break them down in simple terms!

1. Maxi Strategy: Earning Yield in Any Market

Imagine you have extra apples. You agree to sell some if the price drops, and someone pays you for that promise. Plus, you buy a little insurance just in case the price falls a lot.

How It Works:

  1. Deposit LBTC into the Vault: You start by placing your LBTC into our secure vault.
  2. Earn Premiums by Selling Put Options:
    • You agree to buy more LBTC at a lower price in the future (selling put options).
    • For this agreement, you receive a premium—like getting paid upfront.
  3. Protect Yourself with Additional Options:
    • To limit potential losses if prices drop significantly, the vault buys even lower-priced options.
    • This acts like insurance, capping how much you can lose.

Why Use It?

  • Earn Passive Income: Collect premiums that add up over time.
  • Limited Risk: Your maximum loss is capped, protecting you from big market dips.
  • Flexibility: Benefit in sideways, mildly bearish, or bullish markets.

Example Scenario:

  • Current LBTC Price: $60,000
  • You Sell: Put options at a $56,000 strike price.
  • You Buy: Protective put options at a $54,000 strike price.
  • Possible Outcomes:
    • LBTC stays above $56,000: You keep the premium and earn yield.
    • LBTC drops to $55,500: You incur a limited loss, but it's capped because of the protective options.
    • LBTC falls below $54,000: Your maximum loss is limited due to the options you bought.

2. Safe Harvest Strategy: Protecting Your Upside

Think of renting out your car but setting a limit so you can still use it if there's a big event you don't want to miss.

How It Works:

  1. Deposit LBTC into the Vault: Place your LBTC in our vault to get started.
  2. Earn Premiums by Selling Call Options:
    • You agree to sell your LBTC at a higher price in the future (selling call options).
    • You receive a premium for this agreement.
  3. Keep Potential Gains with Protective Calls:
    • You buy even higher-priced call options.
    • This means if LBTC's price skyrockets, you still benefit from most of the gains.

Why Use It?

  • Earn Yield: Gain income from premiums in stable or declining markets.
  • Upside Potential: Don't miss out on significant profits if the market rallies.
  • Risk Management: Limits the amount of upside you give up.

Example Scenario:

  • Current LBTC Price: $60,000
  • You Sell: Call options at a $65,000 strike price.
  • You Buy: Protective call options at a $70,000 strike price.
  • Possible Outcomes:
    • LBTC stays below $65,000: You keep the premium and your LBTC.
    • LBTC rises to $68,000: You sell your LBTC at $65,000 but start gaining again above $70,000 thanks to the protective calls.
    • LBTC soars to $75,000: You benefit from the price increase above $70,000, reducing the missed opportunity.

Benefits of Using Lombard Finance Vaults

  • Passive Income Generation: Earn regular yield without constant trading.
  • Market Versatility: Strategies designed for various market conditions.
  • Risk Control: Built-in measures to protect against significant losses or missed gains.
  • Easy Participation: Our automated vaults handle the complex parts for you.

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