TERRAM TOKEN · HOW IT WORKS
Sell puts. Hold ETH when the strategy takes ownership. Sell covered calls. After the cycle is complete, a share of a positive net result may support TerraM buybacks and liquidity.
The wheel combines cash-secured puts with covered calls. It starts with cash reserved to buy ETH at a chosen strike. If puts expire out of the money, the strategy can sell another put. If the strategy acquires ETH, it moves to covered calls against that holding.
For this illustration, assume 1 ETH, a $2,500 put strike, and an illustrative $400 gross premium checkpoint. These are hypothetical figures, with no assumed time to reach them or expected rate of return.
Reserve $2,500 for the illustrated 1 ETH exposure. Sell a put at a $2,500 strike and receive a premium. If it expires out of the money, retain the premium and reassess before selling the next put.
If there is no assignment or purchase, the strategy can remain in the put stage as premiums accumulate.If ETH falls below the put strike, the put creates a loss or a purchase obligation, depending on settlement. The spot-backed wheel then holds 1 ETH and carries its price exposure.
The premium only partially offsets a fall in ETH. Adjusting or rolling an option does not remove that loss.Sell calls against the 1 ETH holding and collect further premiums. Calls that expire out of the money can be followed by another call. A call that finishes in the money can lead to an exit or a cash settlement.
Calls limit upside above the strike; they do not protect the holding from a large fall.Suppose four put positions collect $50 each, for $200 in put premiums. The strategy then moves into 1 ETH at an economic entry of $2,500. Four covered-call positions collect another $50 each, bringing gross premiums to $400. Assume the ETH is eventually sold at $2,500 and all related options are closed, expired or settled.
The $50 premiums and eight positions are arithmetic assumptions, not quoted prices, a trade recommendation or a weekly income forecast. A put-only path could also collect $400 without moving into ETH. Reaching that number alone does not close an open position.
| Item | Calculation | Result |
|---|---|---|
| Put premiums | 4 × $50 | +$200 |
| Covered-call premiums | 4 × $50 | +$200 |
| Realized ETH result | 1 ETH: $2,500 entry → $2,500 exit | $0 |
| Fees and other costs | Assumed total | −$20 |
| Realized net cycle result | $400 + $0 − $20 | +$380 |
Once the cycle is reconciled, management may consider allocating 25% of a positive realized net result to buybacks and 25% to Raydium liquidity. Applying those percentages to the illustrated $380 net result gives:
These are possible allocations, not automatic transfers. A liquidity contribution requires TerraM and its paired asset in the appropriate proportions; the dollar allocation is a budget, not a guarantee that the pool’s displayed liquidity will rise by that amount. Management decisions, available funds and execution conditions determine what happens.
If, in a different outcome, the ETH must instead be sold at $1,800, the underlying loss is $700. With the same $400 in premiums and $20 in costs, the completed result is −$320. There is no positive net result to allocate under this approach.
Open ETH losses, option settlement payments, fees and closing costs belong in the accounting. Gross premium totals should never be presented as net trading profits.
The trading account and the TerraM / USDC pool are separate. A buyback purchases TerraM at available market prices; it is not a burn unless a separate on-chain burn occurs. Adding liquidity can improve depth for a given trade size, while introducing pool and market risks. Neither action guarantees token-price appreciation.
Holding TerraM does not create ownership of the trading account, a claim on profits, dividend rights, redemption rights or a guaranteed price. Treasury operations should be supported by attributable wallets, transaction signatures, timestamps, assets and amounts before being reported as completed.
Weekly pool snapshots record dated token-market observations. They are separate from strategy performance and completed-cycle accounting. The example above is educational and is not a TerraM transaction or performance report.
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