3. Bands & Trading

Traders can swap ‘bands’ (bounded slices of a perp’s payoff) on Temporal

Bands are equivalent to American style perpetual options (when no outer bound specified) / their vertical spreads (when outer bound specified).

All sold bands are fully backed by the trader’s perp notional.

Traders swap one band for another of equal value at the time of trade. All trades are premium-neutral.

Positions can be opened through the following swap structures:

• Option ↔ Opposite-direction option

• Option ↔ Opposite-direction vertical spread

• Vertical spread ↔ Opposite-direction vertical spread

Positions are closed by simultaneously buying back the residual (out-of-money) portion of a sold option or vertical spread and selling the residual (out-of-money) portion of a bought option or vertical spread.