Benchmark an options-income strategy against a matched spot position and report NAV, premium, realized P/L, unrealized P/L, drawdown, cash/collateral and open exposure separately. A single premium or annualized-yield number cannot establish whether the strategy improved the portfolio outcome.
Terramatris uses weekly records as historical documentation, not as evidence that any future premium target will be met. A useful benchmark makes the strategy falsifiable: it can show where an overlay added value, where it lagged and how much risk it used to obtain the result.
Choose a benchmark before reading the outcome
A fair BTC options benchmark begins with the same BTC quantity, starting date and initial capital as the overlay. A fair ETH benchmark does the same for ETH. The benchmark should be valued at the same timestamp and use a documented price source. If the overlay holds cash, stablecoins or several assets, those allocations should be shown instead of quietly comparing it with a full-spot portfolio.
For example, an ETH covered-call portfolio and 1 ETH held without an option can be compared at each reporting date. The overlay’s NAV includes ETH, cash, option marks, settlement, fees and collateral. The spot benchmark is simply the same initial ETH valued at the same price. The difference is the overlay’s relative result, not a prediction.
Keep four performance figures separate
Gross premium collected
Gross premium is cash received for writing options before fees, buybacks, losses and underlying movement. It identifies option cash flow, not total return.
Realized P/L
Realized P/L records closed, expired or settled transactions under the selected accounting convention. It still may not include the current value of open positions.
Unrealized P/L
Unrealized P/L reflects the mark-to-market change in assets and open options. It can change rapidly with spot price, implied volatility and time to expiry.
Net asset value
NAV is the broadest portfolio-value measure when it includes the assets, liabilities, cash, collateral and open positions that belong to the strategy. It is the figure readers need when comparing a portfolio outcome with a benchmark.
This separation extends the framework in Options Premium Is Not Profit. The purpose is not accounting formalism for its own sake; it is to prevent a premium inflow from being misread as a completed gain.
Include drawdown and downside exposure
A strategy can have positive premium while experiencing a large NAV drawdown. Report peak-to-trough drawdown, the date and valuation method, and the spot-benchmark drawdown over the same interval. A lower drawdown may be meaningful, but it should be evaluated alongside foregone upside, cash allocation and the possibility of future assignment.
For short puts and calls, include the strike, expiry, contract size, collateral, settlement currency and concentration. These describe the open risk that may not be visible in an NAV line alone.
Avoid misleading annualization
A premium collected over a few days can be divided by capital and multiplied into a large annualized percentage. That arithmetic describes a hypothetical repeated rate, not a forecast. It assumes similar premiums, similar volatility, no adverse moves, uninterrupted liquidity and no changing collateral requirement. Those assumptions are exactly what a risk report should surface, not hide.
Use period returns and cumulative NAV first. If an annualized figure is shown for analytical context, label the method, period and assumptions clearly and never treat it as a promised yield.
A minimal reporting table
- Starting NAV and date.
- Ending NAV and valuation date.
- Matched spot benchmark return.
- Gross premium, realized P/L and unrealized P/L as separate lines.
- Fees, funding, interest and material transaction costs.
- Open underlying and option exposure, collateral and settlement currency.
- Peak-to-trough drawdown and the largest concentration.
Terramatris’ performance page provides historical records. The next step for any reader is to ask how values are defined and what is not available, rather than assuming every blank field or premium line tells the whole story.
How this changes decisions
A benchmark can reveal that a strategy made money but lagged spot in a rally, or reduced downside but gave up enough upside that the trade-off was not worthwhile. It can also expose whether results came from option cash flow, asset movement, cash allocation or a one-off event. That evidence improves strategy design more than a higher headline premium.
For the related portfolio choices, see why options-income strategies can underperform spot and position sizing for crypto options.
Bottom line
Benchmarking should make a crypto options strategy easier to evaluate, not easier to market. Match capital and dates, use NAV as the portfolio measure, separate premium from P/L, report drawdown and disclose open exposure. Readers can then compare methodology in Start Here and follow future documentation without mistaking a premium figure for a promise.
This article documents a research framework, not a recommendation or a promise of income. Options can create obligations, losses, assignment risk, liquidity risk and counterparty risk. Any implementation needs its own collateral, venue and position-size controls.
Set a valuation policy
A benchmark is only as useful as its valuation policy. State the price source, timestamp, treatment of cash, stablecoins, fees, open options and collateral. Apply the same policy consistently. If an item cannot be priced reliably, report it as unavailable rather than assigning a favorable value.
Weekly observations can be informative, but they do not replace a full trade ledger. A serious review connects the NAV series to the transactions, contracts and valuation inputs that produced it. That makes revisions traceable and prevents a report from treating a changing methodology as performance.
Frequently asked questions
Is premium a benchmark?
No. It is one strategy activity measure. A benchmark compares the portfolio outcome with a relevant alternative over the same period.
Should cash earn the same return as spot?
No. Cash allocation is part of the strategy choice and should be shown rather than assumed to behave like the underlying.
Why include open options?
They can carry material mark-to-market value and future obligations. Omitting them can overstate or understate NAV.
A reader’s evidence checklist
Before treating an options strategy as useful, identify the exact underlying, contract size, strike, expiry, settlement terms and collateral. Then ask which figures are observed, which are estimated and which are unavailable. A strategy description that names only premium but not the obligation, open exposure or valuation method leaves the most important risk questions unanswered.
Review a sequence rather than a single favorable expiry. The useful record shows the starting allocation, the decision rule, changes to the position, fees, assignment or settlement, ending NAV and a comparable alternative. It should also identify where the record cannot support attribution. That discipline is especially important in crypto, where liquidity, venue rules and collateral values can change quickly.
Terramatris publishes research and historical strategy documentation so readers can inspect definitions and limitations. The appropriate next step is to compare the methodology with the relevant strategy pages and performance records, not to treat this educational framework as a trade instruction.