Friktion on Solana offers a “covered call” strategy for numerous assets, including LUNA. This strategy’s overall return depends on how often the call options are exercised, i.e. how often LUNA ends up above the strike price of the option.

Determine how many weeks during the past month that LUNA’s price has increased more than 15% in a 7-day period. Based on this performance, what insights or implications can you draw about the true profitability of a LUNA covered-call strategy?

Regarding the methodology, I have done a calculation about the change rate in LUNA price withiin each 7-day period of time during the last 30 days. Then, I have observed how many times the increase ratio was above 0.15, representing an increment of over 15%.

The chart above shows the results obtained thanks to terra.oracle_prices Flipside table. During the first days, the price was too volatile to enter a covered call involving LUNA token, reaching a total 0f -0.4 rate of change in a 7-day period, equivalent to a more than 40% in change of the price. In Feburary 4th, the trend changed and the price started to flip its direction and in February 7th there was the first increment in price above 15%, reaching a change of rate above 0.17. Then, the rates were maintaned between 0.1 and -0.1 but in the last 7-day period analyzed, the price increased again considerably over 0.2 ratio, being a percentage of increment above 21%.

Then, the LUNA strike ends up above 15% 2 times during the last month. It is a good option for a covered call, however, this type of strategies required a non volatile assets to be succeeded, because if the asset is too volatile, there is the risk to be closed before the target is reached. For example, if someone entered to the vault before February, his/her position were closed previously due to volatilty of the last days of January, and the 2 increments during February above 15% were not succeeded in that case.