OCT 4, 2026
70 MIN READ
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PERPS+, cross margin hedging, spreads and carry, all in one margin account, alongside a full reference on the trading strategies people actually run: trend following, mean reversion, momentum, breakout, pairs trading, funding arbitrage, volatility strategies and the position sizing systems that keep any of them survivable. Some of this is built into Aevo. Most of it you build yourself, and this page covers both.
TL;DR
Perps and options sit in one cross-margin account. That’s what makes multi-leg strategies practical rather than theoretical. OTC trades are outside the regular margin system and happen on mainnet.
PERPS+ is built-in hedging: options protection attached to a perp at entry, in one tap, with no options knowledge needed. It reached mobile in July 2026, so the phone app now matches desktop feature for feature.
PERPS+ covers BTC and ETH perpetual futures only. Everything else on the venue, altcoin perps and tokenized equity perps included, has to be hedged manually or through OTC. This is the most common wrong assumption about the product.
Three PERPS+ modes. Limit My Loss caps the downside, upside uncapped. Get Paid to Hold takes a premium now for a profit ceiling. Lock My Range defines both ends at close to zero net cost.
Every enhancer has a duration: 1 week, 2 weeks, 1 month or 2 months, and the range you can set on the slider widens with it, from 5% to 8% at a week, up to 5% to 20% at two months.
Cross margin hedging means a hedge reduces your margin requirement instead of doubling it. The worked comparison below is the reason simple hedging is affordable here at all. Under isolated margin, most of these strategies don’t pay for themselves.
Permanent protection is expensive enough to change the strategy. There’s an annual-cost table below showing what always-on hedging takes out of a year, and what that implies about when to buy it.
Beyond hedging, this page is a full reference on the strategies traders actually run, most of which have nothing to do with options at all: trend following, mean reversion, momentum rotation, breakout trading, scalping, swing and position trading, pairs trading, funding rate arbitrage, and the volatility and options-income strategies that sit on top of all of it.
The wheel, translated for cash settlement. The classic options-income cycle assumes physical assignment. Aevo settles in cash, so the mechanics are different, and there’s a section below that translates the strategy properly rather than describing the equity version and hoping it applies.
Position sizing is a system in its own right, separate from any entry signal. Fixed fractional, volatility-based sizing and the Kelly criterion are covered below, because a good entry with bad sizing is still a losing system.
The manual version of that trade got a lot easier on 7 August 2026, when six Ondo tokenized equities listed with both spot and matching perps. Both legs of a carry trade now sit on the same venue, in the same account, on those markets.
Off-chain matching with on-chain settlement means no gas per trade, which matters when a strategy has three legs and needs adjusting.
For size or non-standard strikes, Aevo OTC handles what the order book can’t, including downside protection on altcoin perps, where PERPS+ doesn’t reach.
Every strategy here is one you could build manually. The point is that Aevo makes the built-in ones cheap enough in effort and margin to actually use, and gives the manual ones a single account to run in.
Most crypto traders run exactly one strategy: buy a perp, set a stop, hope. It works until a wick takes the stop out and the market immediately reverses, or until a gap opens through it.
There’s a much larger toolkit than that, and almost none of it is specific to Aevo. Trend following, mean reversion, pairs trading, funding arbitrage and options income strategies have been run on every liquid market for decades, and they translate to a perps and options exchange with a few venue-specific wrinkles worth knowing before you start. This page covers those wrinkles, the built-in tools that make some of them cheaper to run here than elsewhere, and the strategies themselves in enough detail to actually execute one.
Options fix the “buy a perp, set a stop, hope” problem specifically, and almost nobody uses them, because the interface has traditionally demanded you understand Greeks before you can place a trade. Aevo’s product line is essentially one long argument with that assumption: simple hedging first, complexity available underneath if you want it. The team has been running crypto options venues since 2020 and has cleared more than $10 billion in options volume across that time, which explains the design priority. The hard part was never the pricing engine. It was the interface.
01
Why does one margin account change what's possible?
Because the cost of a hedge is mostly a margin problem, not a premium problem, and the same is true for most multi-leg strategies below.
Aevo runs perps and options inside a single cross-margin account. Your collateral backs both, and the margin engine looks at your net exposure. OTC positions are the exception: they happen on mainnet, outside the regular margin system. See unified margin.
Under isolated margin, a long ETH perps position and a protective ETH put are two positions, each requiring its own margin. You’ve spent premium on the put and locked up capital twice, and the strategy has to overcome both before it makes sense. The same problem hits a pairs trade (two positions, two margin requirements, no netting) and a covered call (the perp and the option treated separately rather than as one bounded structure).
Under cross margin, the second leg reduces the risk of the combined position, so the margin requirement reflects that. The hedge, or the offsetting leg, frees capital rather than consuming it. That single difference is what moves multi-leg trading from something people know they should do to something they actually do.
Add zero gas per trade, from Aevo’s off-chain matching and on-chain settlement, and adjusting a three-leg position stops carrying a cost that discourages you from adjusting it.
There’s a third lever people miss, and it sits in the collateral rather than the strategy. Aevo’s collateral framework accepts more than plain USDC. aeUSD, its yield-bearing collateral asset, is whitelisted at a full collateral factor, so margin can earn while it’s doing its job as margin. On a directional trade that’s a rounding error. On anything whose whole return is a carry, such as a basis trade, a covered call rolled monthly, or a hedged book that sits still, the yield on the collateral and the yield on the strategy add up in the same account, and the second one is often the more reliable of the two.
One caveat cuts the other way. Cross margin means one pool of collateral. A loss anywhere draws on the capital supporting everything else, including your hedged positions and any relative-value trade you’re running. The netting is a benefit on correlated exposure and a transmission channel on uncorrelated exposure. A small-cap perp going wrong can pull margin away from a perfectly well-constructed collar, and the portfolio-heat section further down is directly about managing that.
02
What the hedge actually does to your margin
The claim above is the load-bearing one on this whole page, and it’s usually asserted rather than shown. So here it is with numbers.
These are illustrative. The live margin engine is the authority, and your actual requirement depends on the strike, the expiry and the current risk parameters of the market you’re in. But the direction and rough magnitude are the point, and they’re what people get wrong.
Take a 10,000 USDC long on ETH perps at 5x leverage. Initial margin at 20% is 2,000 USDC.
Unhedged. You’ve committed 2,000 USDC of margin, and your downside is bounded only by liquidation. The margin engine is holding capital against a position that can lose most of its value.
Hedged, under isolated margin, which is the model most venues use and the reason hedging has a reputation for being expensive:
The perp still needs its own 2,000 USDC.
The put is a separate position needing its own collateral, plus the premium you paid for it, call it 250 USDC of premium.
Total capital committed: 2,250 USDC and up, for a position whose risk you have just reduced.
You have paid twice, once in premium and once in capital, to make the position safer. That is the arithmetic that stops people hedging.
Hedged, under cross margin on Aevo:
The margin engine looks at the combined position. A long perp with a put underneath it cannot lose more than the distance from spot to the floor, plus the premium. That is a defined, bounded loss.
So the requirement is assessed against that bounded loss rather than against the perp’s full downside. The put isn’t a second position consuming margin; it’s a risk reducer, and the requirement falls to reflect it.
Total capital committed: the premium, plus a materially smaller margin requirement than the unhedged perp needed.
Read the third case against the first rather than the second, because that’s the comparison that changes behavior. On Aevo, putting a floor under a position can leave you holding less margin against it than you were holding before you hedged. The premium is a real cost and it doesn’t disappear. But the capital cost moves the other way, and on a book of several positions that’s frequently the larger number.
Three practical consequences:
A hedge can be self-funding in capital terms. The margin released by bounding the risk can be a meaningful fraction of the premium, and occasionally more than it. That’s the specific mechanism behind the claim that cross margin makes hedging affordable.
Defined-risk structures are the cheapest thing you can hold. A collar bounds the loss at both ends, so it’s assessed on a narrow band of outcomes. This is why Lock My Range at close to zero net premium is such an efficient way to hold a position you want on but can’t afford to be wrong about, and it’s the same logic behind iron condors and credit spreads further down this page.
The benefit scales with how many positions you run. One hedged position saves you some margin. A book of hedged positions netting against each other in one pool is a different capital profile entirely, and it’s the reason this venue suits people running several things at once, including several of the systems described below.
The caveat from the last section still applies and bears repeating here rather than trusting you to remember it: one pool means one pool. The same netting that makes your collar cheap also means an unrelated loss elsewhere draws on the collateral holding it up. Cross margin hedging is efficient, not insulating.
03
PERPS+: protection without learning options
PERPS+ is the strategy layer for people who trade perps and have never touched an option.
You open a perp position as normal. Before you confirm, you pick a protection mode, a level and a duration. Aevo constructs and executes the combined perp-plus-options position in one action. No options chain, no Greeks, no separate order. The full walkthrough is on the options hedging page.
The three modes, and when each one is right:
Mode
Downside
Upside
Net cost
Limit My Loss
Capped at your chosen level
Uncapped
You pay a premium
Get Paid to Hold
Unprotected below
Capped at a ceiling
You receive a premium
Lock My Range
Capped at your floor
Capped at your ceiling
Close to zero
Limit My Loss. You choose the worst outcome you’ll accept, and that’s the worst outcome available. Upside stays completely open. This is a protective put in structure, and unlike a stop-loss it cannot be wicked out of and it doesn’t gap through. You pay for it, in premium.
Get Paid to Hold. You accept a ceiling on profit and receive a premium immediately. A covered call, built into the perp. Right when you’re holding a position you think will grind sideways rather than run, and you’d rather be paid to wait.
Lock My Range. Both ends defined before you enter, at close to zero net cost, because the premium you receive for the ceiling funds the premium you pay for the floor. A collar. Reach for this when you want a position on but need to know your exposure exactly, and you’re willing to trade away the tail to get it.
Each mode works on both long and short perp positions, with the underlying options mechanics mirrored accordingly. PERPS+ also runs on mobile at full parity with desktop, which matters more than it sounds. Positions rarely need protecting while you’re sitting at a desk.
04
What can I actually set on a PERPS+ enhancer?
Three things: the mode, the level, and the duration. Everything else is handled.
Duration. Every enhancer offers four expiry windows: 1 week, 2 weeks, 1 month or 2 months. Longer durations generally cost more on Limit My Loss and pay more on Get Paid to Hold, for the obvious reason. You’re buying or selling more time.
Range limits by duration. The percentage you can set on the slider depends on the duration you chose. Shorter expiries carry tighter ranges, so that the options underneath trade into liquid strikes:
This table is the most practically useful thing on the page and the least discussed. It means your desired protection level and your desired timeframe are not independent choices. If you want a floor 15% below spot, you cannot have it on a one-week enhancer, because the slider does not go there. You either accept a tighter floor or you extend the duration.
Traders hit this constraint and read it as a limitation. It’s closer to the opposite. A 15% floor on a one-week option would sit on a strike with no meaningful liquidity, and the price you’d pay for it would reflect that. The range limits keep you inside the part of the chain that actually trades.
Sizing. PERPS+ automatically sizes the options leg to match your perp’s notional value and direction. There is no separate size field, and no way to over- or under-hedge by accident. If you want a partial hedge, you size the perp accordingly.
One active enhancer per asset. You can only have one PERPS+ enhancer attached to a given perp position at a time. To attach a different one, close the existing PERPS+ option position first.
That last rule catches people mid-trade. If you opened with Get Paid to Hold and the market has started running, you cannot simply layer Limit My Loss on top. You close the first enhancer, then apply the second. Know that before you need to switch quickly, because the sequence takes two actions rather than one.
05
What PERPS+ doesn't cover
This boundary decides whether you build the structure yourself, and it’s the boundary the rest of this page lives past.
It runs on BTC and ETH perpetual futures. If you’re long an altcoin perp, or one of the tokenized equity perps, there is no one-tap floor to reach for.
It attaches at entry. Protecting a position you already have means adding the options leg yourself, which the next sections cover.
It uses fixed shapes. Three modes with a level you set. If you want a specific strike, a specific expiry, or a structure that isn’t one of those three, you’re building it manually.
It tops out at two months. Hedging a six-month view means rolling, or going to OTC for a longer maturity.
It’s one at a time. No stacking two enhancers on the same asset.
It hedges the whole position. The options leg is sized to your perp’s full notional. A partial hedge is a manual trade.
It’s a hedging tool, not a strategy engine. PERPS+ decides what happens to a position you’ve already chosen to open. It has nothing to say about trend following, mean reversion, pairs trading or any of the entry systems further down this page. Those are yours to build.
None of that is a limitation of the exchange, only of the one-tap layer. The manual route reaches everything, and for size or non-standard strikes, Aevo OTC reaches further still. An RFQ on an altcoin put gets you the downside protection PERPS+ can’t offer on that underlying.
The gap between the two widens with every listing the venue adds. One-tap protection is a BTC and ETH feature; everywhere else, hedging is a thing you build.
06
What the three modes look like in numbers
Take a 10,000 USDC long on ETH perps with ETH at 3,000, and follow the same position through each mode. Premiums below are illustrative, and the live quote is what you’ll actually pay, but the shape is exactly right and the shape is the part people get wrong.
Unprotected. ETH at 2,400 and you’re down 2,000. ETH at 2,000 and you’re down 3,333, or liquidated first depending on leverage. There is no floor except the one your collateral imposes.
Limit My Loss, floor at 2,700. That’s a 10% floor, so it needs a one-month duration or longer under the range table above. Say the protection costs 250. ETH at 2,400: the perp is down 2,000, the put is worth roughly 1,000, and your loss is capped near 1,000 plus the 250 you paid. ETH at 4,000: you make 3,333 on the perp, minus the 250. You gave up 250 to convert an open-ended loss into a known one, and kept the whole upside.
Get Paid to Hold, ceiling at 3,300. Say you receive 200. ETH flat at 3,000: you keep the 200, which is the point of the trade. ETH at 3,300: you make 1,000 plus the 200. ETH at 4,000: you still make 1,000 plus the 200, because the ceiling is the ceiling. ETH at 2,400: you’re down 2,000, cushioned by 200. The premium is not protection, it’s income.
Lock My Range, floor 2,700 and ceiling 3,300. The 200 you receive for the ceiling roughly funds the 250 you pay for the floor, so the net cost is near zero. Your outcome is now bounded at roughly -1,000 and +1,000 whatever ETH does. That is a narrower band than most traders realize they’re agreeing to, and it’s the reason to set the ceiling with as much thought as the floor.
The pattern across all three: you are always paying for one side with the other, or with cash. Nothing here is free, and the modes that feel free are the ones where you’ve sold something.
There’s a fourth comparison worth making explicitly, because it’s the one that changes behavior. Limit My Loss versus a stop-loss at the same level. The stop costs nothing up front and the put costs 250. But the stop can be wicked out by a thirty-second move that immediately reverses, it can gap straight through in a fast market and fill materially below where you set it, and once it triggers you’re out of the position entirely. The put does none of those things. It doesn’t trigger, it doesn’t fill anywhere, and you still hold the perp on the other side of the move. The 250 is what you’re paying to remove three failure modes, not one.
A long perp, with and without PERPS+
Illustrative P&L at expiry for a long position entered at 100, with example strikes and premiums. Live pricing depends on market conditions.
The duration comparison
The fifth comparison is about time, and it’s the cheapest two minutes available on this page because almost nobody spends them.
Options premium does not scale linearly with time. Roughly speaking it scales with the square root of it, which means a two-month option is not twice the price of a one-month option, and the cost per week of protection falls as you extend. Illustratively, on the same 10% floor:
Duration
Illustrative premium
Cost per week
1 week
90
90
2 weeks
130
65
1 month
190
about 44
2 months
265
about 33
Those figures are illustrative and the live quote is the authority. But the shape is reliable, and it has a blunt practical consequence. The two-month enhancer costs roughly three times the one-week enhancer and covers roughly eight times the period. A trader who rolls weekly protection for two months pays something close to 720 for coverage they could have bought once for 265.
Three things follow.
If you’re genuinely uncertain how long a thesis needs, buy the longer one. The per-week cost is lower and you remove seven roll decisions, each of which is a chance to roll late or forget entirely.
The range table pushes the same way. Longer durations unlock wider floors, 5% to 20% at two months against 5% to 8% at one week, so extending buys you both a cheaper week and a level you couldn’t otherwise reach.
Short durations are for short, specific risks. A one-week enhancer over a known event on a known date is exactly right. A one-week enhancer rolled indefinitely is the expensive way to hold a two-month view.
This same fact, that premium scales sub-linearly with time, is the mechanical reason calendar spreads work as a strategy, and it comes up again in the volatility section below.
07
Is protection cheap right now? A two-minute check
The duration comparison tells you which expiry is efficient. It doesn’t tell you whether today is a good day to be buying at all, and that question has a short, practical answer most traders never ask because it sounds like it requires a volatility surface.
It doesn’t. It requires one division and one comparison.
Step one: express the premium as a percentage per month. Take the quote, divide by the position’s notional, then normalize to a month. A 250 premium on a 10,000 position held for one month is 2.5% a month. That single number is the only form in which hedging costs are comparable across assets, sizes and durations, and it’s the number to develop a feel for on the markets you actually trade.
Step two: compare it against what the market has been doing. If a 10% floor for a month costs 2.5% and the asset has moved more than 10% in a month twice this quarter, the protection is priced sensibly and probably worth having. If the same floor costs 6% on an asset that has been drifting in a 5% band for six weeks, you are paying for a fear the market is charging for and the recent record isn’t supporting. That comparison, what you’re paying versus what’s actually been happening, is the whole of the test, and it takes as long as looking at a chart.
Three things shift the answer, and they’re worth recognizing when you see them:
Premiums rise after the move, not before it. Implied volatility is the market’s estimate of future movement, and it re-rates upward the moment something happens. The practical consequence is the one from the timing note further down: the cheapest day to buy a floor is a quiet one, and the day you most want a floor is expensive precisely because everyone else wants one too.
Premium rises with distance from the money, but not evenly. A floor 5% below spot costs much more than one 15% below, because it’s far likelier to pay. If a quote looks unaffordable, moving the level further out is usually a bigger lever than shortening the duration, and it’s the lever most people reach for last.
Selling is the mirror of buying. Everything that makes protection expensive makes Get Paid to Hold generous. A market where a floor costs 6% a month is a market where a ceiling pays well, and if you were minded to hold something sideways anyway, an expensive options market is an argument for the income side rather than a reason to do nothing.
The general rule this collapses to: buy protection when it’s cheap and you don’t feel you need it; sell it when it’s dear and you do. That’s an uncomfortable instruction because it inverts the instinct, and it’s the most reliable piece of options judgment available to someone who has never priced an option in their life. It’s also, stated the other way round, the entire logic behind every short-volatility strategy in the section further down.
08
How much of the position should you actually hedge?
This question sits underneath every section on this page, and most hedging advice skips it by treating protection as a switch.
It isn’t a switch. A hedge is a dial, and the two settings most traders use, none and all of it, are rarely the right ones.
PERPS+ hedges the full notional by design, so on the one-tap layer the dial has two positions and you set it by sizing the perp. Manually, or through Aevo OTC, you can buy protection on any fraction of the position you like, and that’s where the interesting choices are.
Three ways to think about the fraction, roughly in order of how often they apply:
Hedge the part you can’t afford to lose, not the part you’d like to keep. If a 10,000 position going to zero would be survivable but a 6,000 loss would force you to close something else, the amount that needs a floor under it is the 6,000. Protection on the remainder is buying comfort, and comfort is the most expensive thing on an options chain.
Hedge more as conviction falls, not as fear rises. These feel like the same thing and are opposites. Fear rises after the market has moved, which is when protection is dearest. Conviction is something you can assess on a quiet Tuesday, and a position you’re only half sure about is one to half hedge before it does anything.
Hedge the whole thing when the loss is structural rather than financial. A treasury position, an allocation you’re publicly associated with, capital that belongs to someone else. When the consequence of a bad outcome isn’t measured in the PnL, partial protection is the wrong shape.
The cheap version of all of that: a half-sized hedge costs roughly half the premium and removes roughly half the tail. For a trader who currently hedges nothing because the premium looks like a real cost, that is the highest-value change available, and it’s the version of the trade nobody suggests, because “hedge” and “don’t hedge” are easier to write about than “hedge 40%”.
Two mechanics are worth knowing when you do it. The margin benefit scales too. A partial hedge bounds part of the downside, so the requirement falls by less than a full hedge would achieve, but it does fall. And a partial hedge still has a whole expiry date: half a position protected to a date is not protected at all after it, so everything in the roll section below applies unchanged.
This is also, functionally, a first cousin of the position sizing systems described later in this page. Sizing decides how big the trade is before it exists; hedging decides how much of an existing trade’s tail you’re willing to carry. They’re solving the same problem from two different ends.
09
What does hedging cost you over a year?
The sections above price a single hedge. Almost nobody buys a single hedge. They either buy none, or they get into the habit and buy them continuously. The second case has a number attached to it that is rarely written down, and it’s large enough to change what you do.
Using the same illustrative premiums as the duration table, on a 10,000 USDC position with a 10% floor, held all year:
Approach
What you pay
Annual cost on 10,000
As % of notional
Rolling 1-week protection
90 × 52
about 4,680
about 47%
Rolling 1-month protection
190 × 12
about 2,280
about 23%
Rolling 2-month protection
265 × 6
about 1,590
about 16%
Half-sized 2-month protection
half of the above
about 795
about 8%
Lock My Range (collar), rolled
close to zero net premium
near zero
near zero, but capped upside
Unhedged
nothing
0
0%, with an unbounded tail
Those numbers are illustrative and real premiums move with implied volatility. But the ranking is stable, and three conclusions follow that are worth more than the precise figures.
Permanent, full-size, short-dated protection is not a strategy, it’s a fee. Sixteen percent a year is a serious hurdle for any directional book to clear, and forty-seven percent is not a hurdle, it’s a wall. If your instinct after reading this page is to hedge everything, always, the table above is the argument against it, and it’s a stronger argument than any amount of prose about over-hedging.
The break-even is a question you can answer. Continuous two-month protection at roughly 16% a year pays for itself only if it saves you more than 16% of notional a year in avoided losses below the floor. On a position you’d size to survive a 30% drawdown anyway, it probably doesn’t. On a leveraged position where a 15% move takes you out of the market permanently, it very likely does, because what the floor is buying isn’t the 15%, it’s the ability to still hold the position afterwards.
The collar is the structure that survives this arithmetic. Lock My Range costs close to nothing in premium because the ceiling funds the floor, which is why it’s the only shape on the table you can genuinely run permanently. What you pay is upside rather than cash, and on a position you were holding through a range anyway, that’s frequently the cheaper currency. If you want to be hedged all the time, be hedged with a collar; if you want to be hedged occasionally, buy the floor outright.
Two habits keep the annual number honest:
Track what you’ve spent on premium across a quarter, not per trade. Per trade, 250 looks trivial. Across a quarter of rolling it, it’s a line item you’d have noticed anywhere else in your P&L.
Ask what the protection actually saved. At the end of a hedged position, note whether the floor was tested. A year of floors that were never near the money is data. It says either that you’re sizing conservatively enough not to need them, or that you’re buying the wrong level.
10
Hedging a short position
Every worked example above is a long, which is how almost all hedging content is written, and it leaves the mirror image undescribed. On a perps venue shorts are half the book, so it’s worth fixing.
The risk on a short is the opposite shape and it is worse. A long can lose what you put in. A short’s loss is bounded only by how far the market can run, and crypto markets run further and faster upwards than most people size for. If any position on the venue deserves a hard ceiling, it’s this one.
The structures mirror exactly:
Protective call. Short perp, long call. The direct equivalent of Limit My Loss, and the same trade in reverse: you choose the worst outcome you’ll accept on the upside, pay a premium, and keep the whole downside. On PERPS+ this is what Limit My Loss becomes when the underlying position is short.
Covered put. Short perp, short put. The mirror of Get Paid to Hold. You take premium now and accept a floor on your profit, meaning the level below which further falls stop paying you. Right when you’re short something you expect to grind sideways or drift, rather than collapse.
Collar on a short. Short perp, long call above, short put below. Both ends defined, near zero net cost. Lock My Range, mirrored.
Three things behave differently enough on the short side to state rather than infer.
Funding usually runs the other way, and that changes the arithmetic. In a market with persistently positive funding, a short is being paid to hold. That carry can fund a protective call outright, so you’re using an income stream the position already generates to cap the risk that same position carries. It’s the closest thing to a free hedge available on this venue, and it’s completely invisible if you only ever think in premium. Against the annual-cost table above, it’s also the one case where permanent full-size protection can genuinely pay for itself.
The ceiling matters more than a floor does. On a long, the floor bounds a loss that was already bounded by zero. On a short, the ceiling bounds a loss that wasn’t bounded by anything. The same structure is doing materially more work, and it’s usually worth paying up in either premium or in a tighter level.
Cash settlement removes the specific thing that makes shorting equities awkward. There is no borrow, no locate, no recall, and, because Aevo’s options are European-style and cash-settled, no early assignment on the short leg of whatever you build around it. What backs the position is margin, not inventory.
The one habit worth carrying over from the long side without modification: buy the ceiling on a quiet day. Upside protection on a short is at its most expensive precisely when a squeeze has started, and by then the level you wanted is behind you.
11
What happens at expiry, and why there's no assignment risk
These mechanics decide what a hedge costs you in attention, and this is where instincts imported from equity options quietly misfire, including in the wheel strategy covered further down.
Aevo’s options are European-style, cash-settled in USDC, expiring at 08:00 UTC. Three facts, each of which removes a category of expiry-day work.
European-style means the option settles only at expiry. There is no early exercise at any point.
Cash-settled means nothing is delivered. The position settles against the final price in cash, and an in-the-money option pays out automatically.
08:00 UTC is the clock. Not a US close, not midnight local.
The consequence that matters most sits on the short leg. A covered call on Aevo cannot be assigned early. If you’re running Get Paid to Hold or a manual covered call and the market runs straight through your ceiling, nobody exercises against you at an awkward moment, your perp is not called away, and you are not forced to deliver anything. The short call sits there, marked to market, and settles in cash on the expiry date.
That is a genuine structural difference from the equity version of the same trade, and it changes the advice. On US equity options, selling calls against a position carries a live risk that the position disappears out from under you before you intended, typically around a dividend. Here, the only thing the ceiling costs you is the upside above it, realized at expiry. The trade is cleaner than its name suggests.
Two smaller consequences worth carrying:
There’s nothing to submit at expiry. No exercise instruction, no do-not-exercise notice. In-the-money pays, out-of-the-money expires worthless, and both happen without you.
Cash settlement is why you don’t need the underlying. A call you sell has no delivery obligation attached, so what backs it is margin rather than inventory, which is the same cross-margin efficiency described above showing up in a different place.
None of this means you can leave a hedged position unattended. It means the thing to diary is the expiry date itself, the day the protection stops existing, rather than a set of exercise decisions in the run-up to it. Which is what the roll section below is about.
12
When the market moves: managing a hedged position
Everything above is about putting a structure on. Rather less gets written about the fortnight afterwards, which is where hedges are most often mishandled, usually by doing nothing, occasionally by doing something reflexive.
Four situations cover nearly all of it.
The market ran hard in your favor. Your long is up 15%, and the floor you set 10% below the old spot is now 25% below the current price. It is barely a hedge any more; it’s protecting a level at which you’d already have given back all your gains. Two sensible responses: do nothing, because the position is now largely playing with profit and the cheap floor still bounds the disaster case; or reset the floor upward, closing the old put and buying one nearer the money, which costs premium and converts a paper gain into a protected one. The choice turns on whether you’d be genuinely upset to hand the move back. If yes, reset. If it was always a lottery ticket, leave it.
The market fell to just above your floor. The uncomfortable one, and the one where the structure is doing exactly its job while feeling like it failed. Your loss is bounded, your put has gained value, and the decision in front of you is about the perp, not the hedge. Three options, and it’s worth knowing which you’re choosing: hold both, and let the floor do what you bought it for; close the perp and keep the put, which turns a hedge into an outright short and is a different trade you should take deliberately if at all; or close both and accept the bounded loss. The one thing not to do is close the put alone because it’s now worth something. That’s selling the parachute while falling.
Nothing happened at all. Sideways for three weeks, and the premium has been quietly decaying. This is the shape that converts people into sellers of options, and correctly so. If you keep buying floors on positions that never test them, the honest read is that your hedges are priced fairly and your positions aren’t as risky as your instincts suggest. Either size the positions so they don’t need hedging, or switch to Get Paid to Hold on the ones you’re going to sit through anyway, and let the premium run in your direction for a while.
Volatility spiked but the price didn’t. Rarer, and pleasant. The put you bought for 250 is now worth 400 despite the price barely moving, because the market has re-rated how much movement it expects. That’s a genuine profit sitting inside a hedge, and it’s the one case where closing the protection early has a clean argument behind it: you can take the gain and re-hedge cheaper later, accepting that later might arrive at a worse price. A middle route usually beats both extremes, so close half and keep half.
Two habits sit underneath all four:
Re-ask the sizing question, not just the level question. After a big move in either direction, the position is a different fraction of your account than it was. The right amount to hedge changed even if your view didn’t.
Decide before, act after. Write down at entry what you’ll do if the position moves 15% each way. Every one of the four situations above is much easier to handle as a plan than as a surprise, and the market has a way of presenting them at inconvenient hours.
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Options structures for hedging, built manually
PERPS+ covers the common cases with fixed shapes. Building the legs yourself gives you full control over strikes and expiries, and it’s the only route on underlyings PERPS+ doesn’t carry.
Protective put. Long perp, long put. Same structure as Limit My Loss, but you pick the strike and expiry rather than a level and a default. Use it when you want protection to a specific date, such as an unlock or a macro print, or when you want a floor outside the PERPS+ range limits.
Protective call. Short perp, long call. The mirror, and the one that matters most on a venue where an upside squeeze is the unbounded risk. Covered in full in the short-side section above.
Covered call. Long perp, short call. Same as Get Paid to Hold. Selling further out of the money collects less premium and gives up less upside. That trade-off is yours to make when you build it manually.
Collar. Long perp, long put, short call. Lock My Range with strikes you choose. Widening the range costs premium, narrowing it can put you net positive.
Call and put spreads. Long one strike, short another. Defined risk and defined reward for a directional view, with the short leg cutting the cost of the long. When you have a target rather than just a direction, a spread is usually cheaper than an outright.
Straddles and strangles. Long a call and a put. A position on movement rather than direction, for when you expect a violent reaction to an event but don’t know which way. Straddles cost more and pay from any move. Strangles cost less and need a bigger one. The volatility section below covers both sides of this trade in more depth, buying it and selling it.
Cash-and-carry. When funding is persistently positive, short the perp and hold the spot exposure. You collect funding while flat on direction. Watch the funding rate rather than the price, and be aware that funding can flip. Covered in depth further down under carry and arbitrage.
Calendar spreads. Same strike, different expiries. A position on the shape of the volatility curve. Not a beginner’s trade, but the cross-margin account makes it manageable when it’s right, and it’s covered fully in the volatility section below.
One execution note applies to everything with more than one leg. Building a structure on the order book means crossing a spread on each leg and wearing the market moving between fills. For anything multi-leg in meaningful size, Aevo OTC will quote the whole package as a single net price, filled as a unit. The structure arrives complete or not at all, which on a thin chain is worth more than it sounds.
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How do I roll a hedge?
This question arrives on the day a two-month enhancer expires and the thesis hasn’t.
Rolling is closing the expiring option and opening a replacement further out, and it deserves its own answer because most people do it badly in one of three ways.
They roll late. Protection is cheapest bought in calm and most expensive bought in the middle of the move you’re protecting against. If the position still needs a floor, put the next one on before the current one is nearly worthless, not after.
They roll to the same strike out of habit. The point of a roll is to restate the trade. If the market has moved 15% in your favor, a floor at the old level is barely a hedge any more. It’s protecting a loss you’d already be delighted to take. Reset the level against where the position is now.
They forget the roll has a cost each time. A monthly roll on a hedge you hold all year is twelve premiums, and that stack is how a sensible hedging habit turns into a drag on returns. The annual-cost table above is that arithmetic done in full. If you’re rolling repeatedly, price a longer-dated structure through Aevo OTC once and compare the total, or switch to a collar.
The mechanical version on PERPS+ is straightforward and worth rehearsing once before you need it: close the existing enhancer’s option position, then apply a new enhancer. One active enhancer per asset means the sequence is always close-then-open, never open-then-close, so there is a moment in between where the perp is naked. On a fast day, do it in a quiet minute rather than a loud one.
One timing note follows from the expiry mechanics above. Expiry is 08:00 UTC, so an expiring hedge stops protecting you at a specific hour, and the hours either side of it are the ones where a gap finds you unhedged. Roll in the session before, not on the morning of.
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Carry when both legs are on the same venue
Cash-and-carry is the oldest trade on this list and historically the most annoying one to run, for a reason that has nothing to do with the idea and everything to do with plumbing: the two legs usually live in different places.
The classic version is short the perp on a derivatives venue, hold the spot somewhere else. That means two accounts, two sets of collateral, a transfer whenever one side needs margin, and a basis that can move against you while your capital is in transit. The trade is simple. The operations are not.
On 7 August 2026 that changed for six markets. Aevo listed six Ondo tokenized stocks (NVDAon, TSLAon, SPYon, QQQon, HOODon and GOOGLon) with spot and matching perpetual futures, in the exchange’s first listing of tokenized real-world equities. Each token carries one-to-one backing by the underlying equity and settles on-chain through Aevo’s infrastructure. The practical consequence is precise: a trader can hold the tokenized stock and short its corresponding perpetual from the same Aevo account.
That collapses the operational problem. Both legs, one venue, one cross-margin pool, no transfers between platforms, no gas per adjustment.
Two pieces of context worth having before you assume the trade is free money.
The underlying asset class is liquid and growing fast: Ondo’s tokenized stocks have cleared upwards of $27 billion in cumulative volume with the platform holding above $1 billion. This is not a thin experiment, and that depth is what makes the spot leg fillable at size.
The venue landscape is also competitive, which is the part that governs your return. Ondo launched its own perpetual futures platform, Ondo Perps, on 7 July 2026, offering up to 20x leverage on equities, ETFs, commodities and indices, with tokenized stocks usable as collateral. When several venues run perps on the same tokenized equity, funding rates across them tend to converge, and convergence is exactly what compresses a carry trade’s yield. The operational advantage of having both legs in one account is real and durable. The funding spread that pays you for the trade is neither, and it is the number to check daily rather than the setup.
How to think about running it:
The position is delta-neutral by construction, not by monitoring. Long the token, short the same notional in its perp. Price moves cancel. What’s left is the funding stream and the basis.
Your return is funding, and funding is not a promise. Positive funding means longs pay shorts, so the short perp leg receives. Negative funding reverses it and the carry becomes a cost. Watch the rate, not the price. That’s the whole discipline of the trade.
Cross margin is doing real work here. The two legs offset, so the margin engine sees a hedged position rather than two full-size ones. This is the same mechanic quantified in the margin section above, applied to a spot-versus-perp pair instead of a perp-versus-option one.
Count the yield on the collateral too. On a trade whose entire return is a few basis points of funding, what your margin earns while it sits is not a footnote. It’s a second income line on the same capital.
Check each market’s own specification. Aevo runs two meaningfully different perpetual specifications, being crypto perps and tokenized equity perps, and the parameters are not interchangeable. Read the market’s page before you size anything.
What the arithmetic looks like
Illustrative, because funding moves constantly and the live rate is the only one that counts. But the shape tells you what kind of trade this is.
Put 10,000 USDC of notional on each leg: hold 10,000 of a tokenized equity, short 10,000 notional of its perp. Say funding runs at an annualized 10% in favor of shorts across the period you hold it.
Gross carry: roughly 1,000 USDC a year on 10,000 of notional, or about 2.70 a day. It arrives in small increments each funding interval rather than as a lump.
Collateral yield, if your margin sits in a yield-bearing asset, adds a second line on the capital backing the position, separate from the funding and not dependent on it.
Costs: fees on entry and exit for both legs, and fees again each time you rebalance.
Three things fall out of those numbers, and they’re the reason to do the arithmetic before the trade rather than after.
The return is thin per unit of notional, so the cost lines matter disproportionately. A trade earning 10% annualized on notional does not survive being over-traded. Every unnecessary rebalance is a real percentage of the year’s carry.
Funding at 10% is not a rate you’re entitled to. It’s a snapshot. The same market can pay 30% for a fortnight and then flip negative, at which point you’re paying to hold a position with no directional upside to compensate you. The discipline is checking the rate on a schedule and being willing to close.
Delta-neutral is not risk-free. The legs cancel on price. They don’t cancel on funding regime, on the basis moving while you’re rebalancing, or on a collateral shortfall somewhere else in a cross-margin account.
One structural feature of the equity markets deserves flagging, because it has no equivalent in crypto. The underlying stops trading. The perp runs continuously, the equity behind it closes at the bell and reopens the next session, and anything that happens to that company overnight arrives in the price on the open. A delta-neutral pair is largely insulated from that by construction, since both legs reference the same underlying, but a one-legged position, or a pair you’ve let drift out of balance, is not.
Be clear about what this section does and doesn’t claim. It describes the manual trade, which is available to you today on those markets.
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What if I want the strategy run for me?
Aevo’s automated strategies, including the Basis Trade vault, are deprecated products, so on Aevo the cash-and-carry is a trade you run yourself. The structure is the same one described above: buy spot and sell a perpetual future on the same asset against it, collecting funding payments. Because every long spot position is balanced by a short perp, the position takes no directional exposure, so it is delta-neutral, and it performs positively as long as the funding rate is positive.
The rationale is the basis itself. Spot and futures prices diverge on supply and demand, and funding payments exist to pull them back together:
Positive funding rate: long position holders pay short position holders.
Negative funding rate: short position holders pay long position holders.
Hold the short perp leg while funding is positive and you are on the receiving end of that payment, with the spot leg neutralizing the price risk.
Cash-and-carry is not a difficult idea; it’s a difficult thing to maintain. Rebalancing as prices move, managing the margin on the short leg, and being awake when funding flips are all jobs, and doing them badly turns a delta-neutral position into a directional one.
Two things to be clear-eyed about. The trade is not risk-free, since delta-neutral means no directional exposure rather than no exposure, and a sustained negative funding regime turns the income stream into a cost. And it is a different shape of return from everything else on this page: no view, no timing, no upside beyond the carry.
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Directional strategies, run by hand
Everything above assumes you already know you want long exposure, short exposure, or no directional exposure at all, and covers what to do about the risk once you’re in. This section and the two after it are about deciding what position to take in the first place. None of it is Aevo-specific. These are the strategies people run on any liquid market, described here in enough detail to actually run one, with a note on where Aevo’s structure makes each one cheaper or easier to execute.
Trend following
The premise: a market that has been moving in one direction is more likely to keep moving in that direction than to reverse, for long enough to be tradeable. You don’t predict the turn. You ride the move and get out mechanically when it ends.
The classic entry signals are a moving average crossover (a faster average, say 50-period, crossing above a slower one, say 200-period, often called a golden cross on the way up and a death cross on the way down) or a channel breakout (buying a new N-day high, selling a new N-day low, the method behind the famous Turtle Traders system, typically run on 20-day and 55-day breakouts together). Exits are usually a trailing stop set as a multiple of Average True Range (ATR), so the stop widens in a volatile market and tightens in a calm one, rather than sitting at a fixed percentage regardless of conditions.
Trend following doesn’t need to be right often. A system that’s profitable on 40% of trades can still make money if the losers are cut small and the winners are allowed to run for several multiples of the initial risk. That asymmetry, small losses and large wins rather than a high win rate, is the entire point of the method, and it’s also why it’s psychologically hard to run: most losing trades look identical to the early stage of a winning one.
On Aevo, perps are the natural instrument, since leverage and easy entry and exit matter more here than options complexity. Two things worth using specifically: PERPS+ Limit My Loss as a mechanical, gap-proof stop instead of a resting stop order, since it removes the wick and gap failure modes described earlier on this page; and checking the funding rate before you commit to a direction, because a strong uptrend often coincides with richly positive funding, meaning a long trend-follower is also paying away part of the move each interval. A trend that costs 20% annualized in funding to hold needs to actually move to be worth it.
Mean reversion
The premise: a market that has moved unusually far from its recent average is more likely to partially retrace than to keep extending, at least over a short horizon. This is the opposite bet to trend following, and it works in the opposite conditions: range-bound, choppy markets rather than trending ones.
Common signals: price touching or exceeding a Bollinger Band (typically the moving average plus or minus two standard deviations), or RSI reaching an extreme (below 30 is conventionally oversold, above 70 overbought, on whatever lookback period you’re using, commonly 14). In crypto specifically there’s a third signal worth knowing that doesn’t exist in equities: funding-rate mean reversion. An extremely elevated funding rate is a crowd of leveraged longs paying to stay in, and crowded positioning like that has historically preceded sharp reversals, since a small adverse move triggers cascading liquidations on the crowded side.
Mean reversion trades want tighter stops and shorter holding periods than trend following, because being wrong usually means you’ve mistaken the start of a new trend for an extension of the old range, and that mistake compounds quickly if you don’t cut it. On Aevo, a mean-reversion short entered into an extreme positive funding print has a pleasant property: it’s also a positive-carry trade while you wait, since shorts are being paid in exactly the conditions that make the reversion thesis attractive in the first place. That’s the funding-arbitrage section further down wearing a directional hat.
Momentum and relative strength rotation
The premise: assets that have outperformed over a recent lookback tend to keep outperforming for a further period, a well-documented effect across equities and, with more noise, crypto. The method is cross-sectional rather than single-asset: rank a basket of assets by trailing return over a fixed window (commonly 30 to 90 days), go long the top slice of the ranking, optionally short the bottom slice, and rebalance the basket periodically, typically weekly or monthly.
This is a different discipline from trend following on one asset. You’re not asking whether BTC is trending, you’re asking which of the assets you follow has the strongest trend right now, and rotating capital towards it. With a long roster of listed perps, including BTC, ETH, SOL, a wide set of altcoins, and now the tokenized equity perps, a momentum rotation can run across a genuinely broad universe on one venue.
Cross margin does real work here specifically: holding several momentum longs and a basket of laggards short nets for margin purposes rather than requiring full collateral against each leg gross. And scanning a wide roster for relative strength by hand is exactly the tedious, arithmetic-heavy sweep the Aevo MCP’s market analysis tools are built to do in one query rather than twenty manual lookups, covered in full in the separate Aevo MCP article.
Breakout trading
The premise: volatility contracts before it expands. A market compressing into a tightening range (a narrowing Bollinger Band, a shrinking ATR, a triangle pattern on the chart) is building energy, and the break of that range, in either direction, tends to be the start of a real move rather than a false signal, especially when confirmed by a volume or open-interest spike.
This is closely related to trend following (both ride a directional move) but the entry trigger is different: trend following enters on an established move, breakout trading enters on the transition out of quiet into loud.
Scalping
The premise: profit from very small price moves, held for seconds to a few minutes, with high trade frequency and small individual gains that compound through volume rather than through size.
Fees and spread dominate the arithmetic at this timescale in a way they simply don’t for a swing or position trade. The difference between a 0.08% taker fee and a maker rebate, trivial on a trade held for a week, can be the entire edge on a trade held for ninety seconds. Scalping also needs a genuinely fast execution path, and this is a place worth being explicit about a limitation covered in more depth in the Aevo MCP article: an AI agent reasoning through tool calls is not a low-latency execution path, and scalping belongs on the order book directly, or against the WebSocket API for anything systematic, rather than in an agentic workflow. It’s a legitimate strategy category. It’s the one on this page least suited to any of the AI-assisted tooling described elsewhere on the site.
Swing trading
The premise: hold for days to a couple of weeks, combining a technical setup (a breakout, a pullback to a moving average, a completed chart pattern) with a defined risk and a defined target, closer in spirit to trend following but on a shorter, more tactical timescale.
This is the strategy category PERPS+ maps onto most naturally. The four available durations, one week through two months, sit directly on top of typical swing holding periods, and Limit My Loss at a level matched to your technical stop gives you the gap-proof version of a swing stop discussed earlier on this page, without having to price and build the put yourself.
Position trading
The premise: hold for weeks to quarters, closer to investing than trading, usually thesis-driven rather than signal-driven: a valuation view on a token, a macro view expressed through the tokenized equity perps, a structural view on a sector.
This is exactly the trader the annual hedging-cost table earlier on this page is written for. A position held for a quarter or a year needs a view on whether continuous protection is worth its cost across that whole horizon, not just at entry, and the collar-versus-outright framing above is the relevant decision. It’s also the trader most likely to be forming a valuation thesis: converting a price into a fully diluted valuation and comparing it against something that already trades, rather than reacting to the number on the screen.
Market making
The premise: post resting orders on both sides of the book, earning the spread from traders who cross it, while managing the inventory that accumulates as one side fills more than the other.
This is a genuinely different discipline from everything else on this page: it’s a systems and infrastructure strategy, not a directional or relative-value one, and it typically needs low-latency quoting, real-time inventory and risk management, and enough capital to be meaningful at the spreads available. Aevo’s lower maker fees make posting resting orders attractive in the retail sense discussed throughout this page: paid to wait rather than paying to cross. That’s a genuinely useful habit for any strategy above. It is not the same thing as running a market-making operation. For most readers of this page, the more relevant role on the liquidity-provision side of the business is the one described in the Aevo OTC article: being quoted by institutional market makers, rather than being one.
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Relative value and arbitrage strategies
Where the strategies above take a view on where a price is going, these take a view on the relationship between two prices, and try to stay closer to market-neutral in aggregate.
Pairs trading and statistical arbitrage
The premise: two assets that are usually correlated (two large-cap L1 perps, or a token against a close competitor in its category) occasionally drift apart in relative terms without any change in the underlying relationship. Trade the spread rather than either leg: long the one that’s lagged, short the one that’s led, sized so the position is neutral to a move in the pair as a whole, and close both legs when the spread reverts.
The common signal is a z-score of the spread against its own historical range: enter when the spread is, say, two standard deviations from its mean, exit around zero, and set a hard stop if the z-score keeps widening rather than reverting, since that’s the market telling you the correlation itself has broken rather than merely stretched. The ETH/BTC ratio is the most liquid version of this trade in crypto, but the method generalizes to any two assets you’d expect to move together.
This is exactly the strategy shape cross margin was built for. Long one perp and short a correlated one is a position whose net risk is small even though its gross notional is large, and Aevo’s margin engine assesses the combined position rather than each leg in isolation, the same mechanic quantified in the margin section near the top of this page, applied here to two perps instead of a perp and an option. The risk worth naming plainly: correlation is a historical observation, not a law. It can and does break on idiosyncratic news hitting one leg and not the other, and a pairs trade with no stop on the spread itself is a bet that it never will.
Funding rate arbitrage, single venue
Covered in full above under “Carry when both legs are on the same venue”: hold the underlying and short the perp on the same asset, on the same venue, collecting funding while flat on price. Worth restating here only to place it correctly in the taxonomy: this is the single-venue, capital-efficient version of funding arbitrage, and it’s structurally the better version available on this exchange specifically, for the reasons given above.
Funding rate arbitrage, across venues
The classic version of this trade predates single-venue spot-and-perp listings: exploit a funding rate that differs between two exchanges on the same asset, or hold spot on one venue against a short perp on another, capturing the funding without the two legs sharing a margin pool.
Flag this one explicitly rather than gloss over it: Aevo’s cross-margin benefit does not extend across venues. A cross-venue version of this trade is capital-inefficient by comparison to the single-venue basis trade described above, since each leg needs its own collateral on its own exchange, and it’s operationally heavier: two accounts, a transfer whenever one side needs topping up, and basis risk on the spread between the two venues’ funding rates rather than just the funding rate itself. It’s a real strategy category and it exists for a reason (funding rates do genuinely diverge across venues, sometimes substantially), but on Aevo specifically, if the asset you want to run this on lists both spot and perp on the exchange, the single-venue version above is the structurally better trade, not merely the more convenient one.
Triangular and correlation trades
A generalization of pairs trading to more than two legs: trading the relationship between a basket and an individual constituent, or between an index-like group and a name that’s drifted from it. The tokenized equity perps create a version of this specific to Aevo worth naming: a position expressing the relationship between a tokenized equity and its crypto-market beta, or between two of the six Ondo tokenized stocks in a sector pair, is the same z-score-and-reversion method as pairs trading above, applied to a newer asset class where the historical relationship is thinner and the correlation correspondingly less trustworthy. Size accordingly.
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Volatility and options income strategies
These strategies take a view on how much a market will move, or on the price of that expectation, rather than on which direction it moves. They sit on top of the options mechanics described earlier in this page and use the same building blocks: strikes, expiries, and the intrinsic-versus-extrinsic value decomposition covered in full in the Aevo OTC article.
Long volatility: straddles and strangles
The premise: buy a call and a put (same strike for a straddle, different strikes for a cheaper, wider strangle), profiting if the underlying moves far enough in either direction to cover the combined premium paid, and losing the premium if it doesn’t. This is a bet on movement, explicitly not on direction, and it’s the natural structure ahead of a known catalyst where the direction is genuinely unknown: a major listing, a macro print, a governance vote with an uncertain outcome.
The trap that catches people running this for the first time: both legs decay every day you hold them, so a straddle bought ahead of an event needs the move to be large enough to cover that decay as well as the premium, and there’s a specific, well-documented failure mode worth knowing by name. Implied volatility is frequently priced up ahead of a known event and collapses immediately after it resolves, even when the price genuinely moves, because the uncertainty the option was pricing has now resolved. That collapse, commonly called IV crush, can cost you money on a straddle even when your directional read on the event turns out correct, because the extrinsic value you paid for evaporates faster than the intrinsic value from the move can replace it. The practical rule: price what the move needs to be to break even before you buy, not just whether you expect a move at all.
Short volatility: strangles, iron condors and credit spreads
The premise: sell premium when implied volatility is rich relative to what the market has actually been doing, collecting the difference as it decays. This is the seller’s side of the two-minute cheapness check described earlier on this page, run in reverse: everywhere that section said protection looks expensive is a place a volatility seller looks for opportunity.
A short strangle (sell an out-of-the-money call and an out-of-the-money put) collects the most premium and carries undefined risk on either side, which is a genuinely dangerous shape without a plan. An iron condor is the defined-risk version institutions and disciplined retail traders actually run: sell the strangle, then buy a further out-of-the-money call and put against each short leg, capping the maximum loss on both sides in exchange for giving back some of the premium collected. This is worth naming specifically because Aevo’s own options strategy tooling, described in the Aevo MCP article, explicitly prices iron condors as one of its named structures, which tells you it’s a strategy the exchange expects to be run rather than an academic example.
Credit spreads (selling a closer-to-the-money option and buying a further one for protection, in either the call or put wing alone rather than both) are the directional cousin of the iron condor: a defined-risk way to express a moderate view (bullish or bearish, but not extreme) while collecting premium rather than paying it. Aevo’s cross margin perps & options treatment is what makes running any of these defined-risk short structures capital-efficient on the exchange: under portfolio margin the requirement reflects the bounded loss the structure actually carries, not the notional of the short leg in isolation.
The wheel, translated for cash settlement
The wheel is a well-known equity options income cycle, and it’s worth translating properly rather than describing the equity version and assuming it applies, because the mechanics genuinely differ on a cash-settled venue.
The equity version, for reference. Sell a cash-secured put on a stock you’re happy to own at the strike. If the stock stays above the strike, the put expires worthless and you keep the premium, then sell another. If it falls through the strike, you’re physically assigned the shares at that price, and you then sell covered calls against the shares until they’re called away, at which point the cycle restarts.
Why that doesn’t transfer directly. Aevo’s options are cash-settled, not physically settled, and European-style, meaning there’s no assignment event at all, early or otherwise, described in full in the expiry mechanics section above. Nothing is ever delivered to you. So the “you now own the shares” step in the classic wheel simply doesn’t happen here in the equity sense.
The cash-settled equivalent. Sell a put at a level you’re genuinely willing to be long from. If it expires out of the money, you keep the premium and repeat, exactly like the equity version. If it finishes in the money, you take the cash settlement, which is economically equivalent to having been assigned and immediately marking the position to market: you’re down the difference between the strike and the settlement price, offset by the premium you collected. From there, the cycle continues by choice rather than by mechanism: you can open a long perp position at the current price to replicate holding the underlying, and then run Get Paid to Hold or a manual covered call against that perp, which is the second half of the wheel, translated. The economics converge on the same place as the equity version over a full cycle. The mechanics that get you there are different, and the important practical difference is that nothing forces the second leg to happen automatically here. You decide, at settlement, whether to actually take the resulting perp position or simply bank the cash outcome and start the next put fresh.
Calendar spreads and volatility term structure
The premise: sell a near-dated option and buy a longer-dated option at the same strike, profiting from the near-dated leg decaying faster than the far-dated one (the shape driven by the same sub-linear premium-versus-time relationship established in the duration comparison earlier on this page), or from a view on the shape of the volatility curve itself: whether near-term implied volatility is priced high or low relative to longer-term implied volatility.
Aevo OTC’s weekly-to-three-month maturity range, covered fully in the Aevo OTC article, is what a calendar spread needs: two expiries on the same strike, quoted and filled as a single net price rather than legged separately on a book where the two fills can drift apart before both are on. This isn’t a beginner’s structure. It’s the one on this page that most rewards actually understanding the mechanical fact established earlier, that doubling the time to expiry adds roughly 40% to premium rather than 100%, since that gap between the two legs’ decay rates is the entire source of the edge.
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Position sizing: the system underneath every strategy
Every strategy above answers “when do I enter and exit”. None of them answer “how much”, and that second question decides survival more often than the first one decides profitability. A good entry system with bad sizing is still a losing system, and a mediocre entry system with disciplined sizing can survive long enough to be improved.
Fixed fractional sizing. Risk a fixed percentage of account equity on each trade, commonly 1% to 2%, calculated as: position size equals (account equity times risk percentage) divided by the distance from entry to stop. This is the same arithmetic already used earlier on this page for the hedge sizing discussion, applied here as the general rule those examples were specific cases of. It automatically shrinks position size after a string of losses (smaller equity, smaller next bet) and grows it after a string of wins, without requiring you to make that adjustment by hand.
Volatility-based sizing. Size positions inversely to the asset’s recent volatility, commonly measured by ATR, so that a “typical” move costs roughly the same dollar risk regardless of which asset you’re trading. This matters specifically on a venue with a wide, varied roster: a fixed contract count or a fixed notional treats a calm major asset and a wildly volatile altcoin identically, when a normal day’s move on the second can be several multiples of the first. Sizing by volatility rather than by notional keeps one position from silently dominating your book’s risk.
The Kelly criterion, and why fractional Kelly is safer. Kelly sizing calculates the mathematically optimal bet size from your edge (win rate and payoff ratio), and it’s worth knowing conceptually even though almost nobody runs it at full size in practice: full Kelly is aggressive enough to produce genuinely uncomfortable drawdowns even when the underlying edge is real, because it assumes your edge estimate is exact, and it never is. The common practical compromise is half-Kelly or quarter-Kelly, sizing at a fraction of what the formula says is optimal, which gives up some long-run growth rate in exchange for a much smoother ride and a much wider margin for the edge estimate being wrong. This is the same principle as the over-hedging point made earlier on this page in a different guise: more of a good thing is not always better, past a certain size the extra risk it adds costs more than the extra return it earns.
Portfolio heat and correlation limits. Sum the open risk across every position in the account at once, commonly called portfolio heat, and cap it, for example never more than 6% of equity at risk across the whole book simultaneously, however many individual positions that spans. This is the direct, practical answer to the cross-margin caveat repeated throughout this page: one pool means one pool, so two positions that look individually small can still breach a sensible heat limit if they’re correlated and would lose together. A pairs trade, a directional perp, and a short-volatility structure can each look fine in isolation and still add up to an account that loses badly on the one scenario, a broad risk-off move, that hits all three at once.
Rules, and keeping a record of them. A sizing system, or any strategy above, only works if it’s actually followed under pressure, which is precisely when the temptation to deviate is strongest. Two habits make that more likely: paper-trading or testnet-proving a new system before running it with real capital, using the same testnet stack described in the Aevo MCP article, and keeping a written record of what you actually did against what the system said to do, the same discipline the MCP article recommends for reviewing an agent’s trades, equally applicable to your own.
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Which strategy for which situation?
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What about hedging an existing position?
You don’t need to close and reopen.
Options positions can be added to an existing perp at any time. The cross-margin account nets the exposure straight away, so buying a put against an open long reduces your margin requirement rather than adding to it. If the position is already offside and you want to stop the bleeding without capitulating, this is the move: a put sets a floor and keeps you in the trade, where closing sets your loss permanently.
Note that this is the manual route by necessity. PERPS+ attaches at entry, so a position you already hold gets its protection through the options market rather than the one-tap layer.
The counterpoint, stated plainly: protection costs money. Buying a put every time you open a long will erode returns, and traders who over-hedge underperform traders who don’t hedge at all. Hedge the positions where a bad outcome genuinely matters. Size the rest so it doesn’t.
A rough test for whether a hedge is worth its premium: if the position going wrong would change what you can do next, forcing you to cut something else or take the account below a level you need, hedge it. If it would just be annoying, size it smaller instead. Premium spent on positions that were never going to hurt you is the most common way a hedging habit turns into a losing one.
One timing note. Protection is cheapest when you don’t feel you need it. Buying a put after a position has already moved against you means paying elevated implied volatility for a floor that’s now further from your entry, so you get less protection for more money, precisely because the market has already reacted. The decision to hedge belongs at entry, or at least on a calm day.
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Things that go wrong
Twelve failure modes worth knowing before they cost you, the eight specific to hedging and four that apply to running any strategy on this page.
Hedging everything. Premium compounds, and the annual-cost table above shows how fast. Protection is for positions that could hurt you, not for every trade you place, and the answer to “this feels expensive” is frequently a partial hedge or a collar rather than none.
Expiry and thesis mismatch. A one-week put doesn’t protect a one-month view. Match the expiry to the risk you’re hedging, remember the range limits tie the two together on PERPS+, and remember that the short duration is the expensive one per week.
Forgetting the ceiling exists. Get Paid to Hold and Lock My Range cap your upside. That’s the deal. If the market runs, you don’t get all of it.
Assuming you can switch enhancers mid-trade. One active enhancer per asset. Changing mode means closing the first position, and that’s two actions at a moment when you probably wanted one.
Letting a hedge lapse silently. An expiry is a date in the future right up until it’s yesterday. If the position outlives the protection, you’re unhedged and you probably haven’t noticed, and with settlement at 08:00 UTC, that transition happens at an hour you may not be watching.
Treating cross margin as free leverage. Cross margin reduces the requirement on hedged exposure. It doesn’t reduce the risk on unhedged exposure, and a loss in one position draws on collateral supporting the others. The margin released by a hedge is capital freed for other things, and spending all of it on more directional risk undoes the point of hedging in the first place.
Ignoring funding on multi-week holds. Carry costs accumulate quietly. Check funding on anything you plan to hold, in either direction. It’s the same number a basis trade is built to harvest, working against you instead, and on a short it’s the number that can pay for your ceiling.
Carrying assumptions across market types. Three different perpetual specifications now trade on this exchange. The margin numbers, the leverage caps and even the availability of a market order are not the same across them. Read the spec of the market you’re actually in.
Running a trend system in a range-bound market, or vice versa. Trend following and mean reversion are opposite bets, and each performs worst in the conditions the other is built for. Know which regime you’re actually in before applying either mechanically, and treat a losing streak as a possible signal that the regime has changed rather than only as bad luck to push through.
Sizing every trade the same regardless of volatility. A fixed contract count treats a calm asset and a volatile one identically, when a normal move on the second can be several multiples of the first. Volatility-based sizing exists specifically to stop one position from dominating book risk by accident.
Trusting a correlation that has quietly broken. A pairs trade or a relative-value structure is only as good as the relationship it’s built on. Set a hard stop on the spread itself, not just a target, so a genuine breakdown in the relationship gets treated differently from a normal, temporary stretch.
Skipping the paper-trading step on a new system. A strategy that sounds right and hasn’t been proven, even briefly, on testnet or on small size, is a hypothesis, not a system. The cheapest place to find out a rule doesn’t work the way you think is before it’s carrying real capital.
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Where to start
If you trade perps and have never used options, start with Limit My Loss on a BTC or ETH position you were going to take anyway. Set the floor where you’d have put your stop, pick the shortest duration whose range reaches it, and compare what you paid in premium against what a stop-out on a wick has cost you before. Then look at what happened to your margin requirement. That second number is the one that surprises people.
If you’re already comfortable with options, the cross-margin account and zero per-trade gas are the reasons to build structures here rather than somewhere they cost margin twice and gas per leg.
If you trade the short side, the protective call is the trade to price first, and the funding you’re already collecting is frequently most of what it costs.
If you want to be hedged permanently rather than occasionally, price a collar rather than a floor. It’s the one structure whose annual cost doesn’t compound against you.
If you don’t want a view at all, a manual basis trade (long spot, short perp) is the strategy that doesn’t need one, and on markets that list both spot and a perp, the manual version of the same trade now runs inside a single account.
If you’re coming to this page for an entry system rather than a hedge, start with the one that matches how much time you actually have to watch a screen: trend following and position trading for the least, mean reversion and swing trading for a moderate amount, scalping and market making for the most. Pick the strategy that fits the attention you have, not the one that sounds most sophisticated.
And if you want the arithmetic done before you commit, the Aevo MCP exposes the options tooling to an AI client, so you can price a structure and see its margin impact on your actual account before placing a single leg.
Trade at app.aevo.xyz, and the full product documentation is at docs.aevo.xyz.
WHERE TO GO NEXT
For the theory behind floors, caps and collars, read how to hedge crypto. To hedge perps with options in one tap, PERPS+ attaches a floor, a ceiling or both to a BTC or ETH perp. Trading leveraged contracts with no expiry? Aevo runs a perps dex with on-chain settlement and 20x on BTC and ETH. New to derivatives? The crypto derivatives guides take you from your first perp to hedging in seven short lessons.
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Quick answers
What is PERPS+ on Aevo?
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Which markets does PERPS+ cover?
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How do I know if a hedge is expensive?
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Is longer options protection more expensive on Aevo?
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What should I do with a hedge after the market moves?
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How much of a position should I hedge?
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What are the three PERPS+ modes?
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How does cross margin make hedging cheaper on Aevo?
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What durations can I set on a PERPS+ enhancer?
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What does it cost to stay hedged all year?
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What is trend following and how do I run it on Aevo?
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What is mean reversion trading?
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What is pairs trading and can I run it on Aevo?
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How is the wheel strategy different on Aevo compared to equities?
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What is an iron condor and why does it matter on Aevo specifically?
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How should I size a position, separately from deciding when to enter?
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Can I hedge a short perp position on Aevo?
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Can I be assigned early on a covered call on Aevo?
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Can I run a cash-and-carry trade manually on Aevo?
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Hedge a BTC perp
PERPS+ is built into the perp ticket.
Trade Perps ↗
BUILT-IN
PERPS+
EXPIRY
08:00 UTC, EUROPEAN, CASH-SETTLED
PERPS+ DURATIONS
1 WEEK TO 2 MONTHS
ACCOUNT
ONE CROSS-MARGIN ACCOUNT
GUIDE / STRATEGIES / HEDGING
This lesson is for education only and isn’t financial advice. Leveraged products can lose more than you expect, quickly. Worked examples are simplified and use illustrative numbers.