What is PolyOptionz?
PolyOptionz leverages Polymarket's prediction markets to create binary option-like instruments for hedging and trading.
Polymarket as Option-Like Instruments
Prediction markets on Polymarket can replicate the behavior of European options with simpler mechanics and lower costs.
If BTC → $115k:
Profit: $500 ($2,000 gain - $1,500 premium)
❌ Expensive due to IV premium
❌ Complex Greeks (Theta, Vega, Delta)
❌ Time decay hurts position
❌ Inefficient for small volatility moves
If BTC → $115k:
Profit: $6000 ($7500 win - $1500 cost)
✅ 12× the profit of call option($6000 vs $500)
✅ Simple probability-based pricing
✅ No time decay, tradeable anytime
✅ Super effective for small volatility moves
⚖️ Feature Comparison
See how binary prediction markets stack up against traditional European options
| Feature | European Option | Polymarket Binary |
|---|---|---|
| Payout Structure | Continuous — depends on price movement | ✓ Binary — fixed 1 USDC or 0 |
| Expiry | Fixed maturity (weekly/monthly) | Fixed resolution time (days/hours) |
| Profit Potential | Unlimited (calls), limited loss | ✓ Limited profit (n shares × 1 USDC), limited loss |
| Pricing | IV, time decay, Greeks (complex) | ✓ Pure probability (simple) |
| Settlement | Cash or physical | ✓ Oracle-based on-chain |
| Liquidity | Centralized (Deribit, CME) | ✓ Decentralized AMMs on-chain |
| Time Decay | ✗ Yes (Theta decay) | ✓ No decay, value follows probability |
| Small Volatility (2-3%) | ✗ Expensive IV premium | ✓ Much cheaper & efficient |
💡 Why Prediction Markets Win for Small Volatility
Binary predictions are significantly more efficient for hedging 1-3% price movements
No need to price Vega, Theta, Delta, or Gamma. You're simply buying a probability (e.g., "12% chance BTC > 115k").
A 2-3% movement can double or triple your position value, while options might barely break even after paying high premiums.
Traditional options lose value over time even if price doesn't move (Theta). Predictions don't — value purely follows market expectations.
Exit anytime before expiry if odds move in your favor. Secondary market trading is always available on-chain.
Maximum loss is known upfront — the price you paid. No exposure to volatility spikes or margin calls.
Traditional option pricing inflates with volatility, making them expensive for short-term or small moves. Binary markets bypass this entirely.
🔧 Replicate Options Strategies
Use Polymarket predictions to implement classic options strategies at a fraction of the cost
Buy "BTC < 110k by 6 days"
Buy "BTC < 106k by 6 days"
Similar to a vertical put spread. Profit if BTC drops moderately, with limited loss if it doesn't move.
Buy "BTC > 115k in 2 days"
Buy "BTC > 118k in 2 days"
Replicates a bull call spread. Captures medium upside without paying for extreme moves.
Buy "BTC > 113k in 3 days"
Buy "BTC < 107k in 3 days"
If BTC moves strongly (beyond 3%) in either direction, you profit. Much cheaper than buying double options.
If holding BTC: Buy "NO BTC > 115k"
For protection: Buy "BTC < 108k"
Acts like a covered call or protective put, limiting downside while maintaining upside potential. Much cheaper than traditional options.