Vol ratio
Vol ratio answers one question: does this pool pay you enough for the price risk you take by LPing it?
It compares two prices for the same risk. One is what the pool's fees pay for it. The other is what the options market pays someone who sells the same risk as a listed option.
Why LPing is like selling an option
A concentrated range kept centred on the price makes money when the price stays calm and loses when it moves: every move leaves you holding more of the token that fell and less of the one that rose. Someone who sells an at-the-money option has the same profile. They collect a premium and lose when the stock moves a lot.
So an LP is selling volatility, paid in fees. An option writer is selling volatility, paid in premium. Vol ratio asks who is paid more for the same amount of risk.
Reading the chip
| Chip | Vol ratio | What it means |
|---|---|---|
| Well paid | 1.2× or more | The fees more than cover the price risk. LPing pays better than selling the matching option |
| Fair | 0.9× to 1.2× | Fees and the option pay about the same for the risk |
| Underpaid | Below 0.9× | The fees don't cover the risk as well as the option would. The same risk is better sold as the option |
| No benchmark | none | No listed options on the underlying, or less than a day of fee history |
Next to the chip is the multiple itself, and underneath it the range width and the tenor of the option it was measured against. Hover for the numbers behind it.
A ≈ before the number means no listed option is as long as the matching tenor, so the nearest listed expiry was used.
Where you'll find it
- Discover: a column in the Simple and Risk views. Sort by it to find the best-paid pools.
- Assets: available under Customise.
- Pool page: in the header strip, and as a chart across widths in the Vol ratio by width tab.
- Width vs net edge: one row per width, next to the vol spread.
What vol ratio doesn't tell you
- It is a ratio, not a return. A Well paid pool can still lose money if the stock moves far more than either the fees or the options expected.
- Gaps aren't in it. The comparison assumes prices move smoothly. A tokenised stock can jump when the US market opens, straight through a tight range. An option writer takes that risk too, but differently.
- It uses the last seven days of fees. A pool whose volume just dried up, or just spiked, will move its ratio as the week rolls.
- It is per pool, at the headline width. Your own width and size change the answer. Use Plan a range for your numbers.
For the calculation, see How vol ratio is calculated. For putting it to use, see LP or sell the option?