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    • Understanding Pseudo Delta Neutral
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FAQ

PreviousDisclaimerNextUnderstanding Pseudo Delta Neutral

Last updated 3 months ago

I entered a "Neutral Position" , the price moved to the edge of my range so I ended up closing off my position. After claiming my funds I see that I experienced a loss. Why?

answer : You've realised your Impermanent loss. Neutral position is essentially shorting volatility. You want to be closing such a position as close to your "Entry Price" as possible provided that such a position was opened in the middle of your range.

The following graph is a good illustration of how PNL changes according to the price at which you close your Neutral position. You can see that maximum loss within the range is close to the edge of the range.

I selected "Full Long" position but I noticed that I realized very small gain . why?

Setting up your borrow ration and entering your collateral is only 1 side of the story. Its important to make sure that when you open your position you also pay attention to "Deposit Ratio". a correct "Full Long" position is made up of the right combination of "Deposit Ratio" + "Borrow Ratio" . Taking SOL/USDC as an example it would mean the following :

  1. Borrow 100% USDC

  2. Open out of range position where the range is on the right side of the "current price".

  3. The range acts as a DCA out of your long position.

  4. Set limit order to "take profit"

Above is an example of a "Full Long" position with the deposit ratio being slightly inside the range. You can see that the range sits between $180.5 and $200. I put JUP in lending and I see that my yield in lending has declined in $ value. What happened? DefiTuna doesn't sell your Lending yield that you generate , for this reason it is subject to $JUP token dollar value fluctuations . If JUP drops in $ value , it will be reflected so on your yield value.

Color of lines = Days spent in range.