Hedging Crypto Options with Futures. more dangerous than I thought

Updated: 19 January, 2023 seen 46

In mid-December 2022 we launched the TerraM token, which raises funds to trade Ethereum on the Deribit platform. As the main chief financier and developer behind the TerraM coin, I come up with an idea to hedge all open positions with futures (both short and long).

In theory, this strategy is a 0-risk game, in practice, it is much more complicated - with the biggest drawback being - the price oscillation near the strike price.

In the past weeks, we have been pushed out several times. I have been talking more in-depth about hedging with futures and price oscillation in this article: #5 TerraM token update: Value drops by -9.31% in the past 7 days

Bad luck and overtrading with futures are to blame. We tend to hedge every open position with futures. The downside of such hedging is price oscillation. This is what actually happened to us last week a few times.

Ethereum challenged our strike prices, which we hedged with futures, but then a pullback happened, which again made pain for the futures.

Despite, I still believe in hedging with futures, I've made my second thoughts and plan to limit hedging with futures, but instead focus on buying puts and selling credit spreads. 

At the moment we have 3 positions under water, all have become problematic because of this hedging strategy, it will take some time to roll out and turn profitable.


Hi! My name is Reinis Fischer (38), a proud dad and devoted husband. CEO and Founder of Terramatris crypto hedge fund, drone enthusiast, world traveler, photographer, and passionate lover of Georgian cuisine (vegetarian).

An ex-pat living in Georgia since 2011, I trade stocks, take photographs, work out at the gym, and many more. Here I write about travel, finance, and other things that might interest me.