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From Understanding to Execution: Mastering Trades on PancakeSwap’s CLAMM

In our journey so far, we’ve delved into the basics of options trading, explored how options are priced, and understood the intricacies of PancakeSwap’s Concentrated Liquidity Automated Market Maker (CLAMM). Now, it’s time to move from theory to practice. In this post, we’ll guide you through the process of trading on PancakeSwap’s CLAMM, using real-life case examples and a walkthrough of the user interface.

Getting Started: Accessing PancakeSwap’s CLAMM

Before we dive into trading, you’ll need to access PancakeSwap’s CLAMM interface. You can do this by visiting pancakeswap.stryke.xyz. Once there, connect your wallet by clicking the "Connect Wallet" button located at the top right corner of the interface.

Understanding the CLAMM Trading Interface

When you first land on the CLAMM trading page, you’ll see a clean and intuitive interface designed to make your trading experience seamless. Here’s what you’ll find:

1. Asset Selection: At the top left of the interface, select the asset you want to trade options on, such as WETH/USDC, from the dropdown menu.

Supported Token Pairs & other relevant information is displayed here.

2. Below the main chart, you’ll find the “Options Chain” section where you can view different strike prices. The expiration timeframes are selectable on the right panel under “Trade,” where you can choose between 1 hour to 1 week.

Filter between calls & puts to execute a strategy based on your preference.

3. Order Summary: The "Balance" field under the "Trade" panel allows you to review your current balance and set the amount to be used for the option purchase.

Choose your timeframe, toggle Auto Exercise & initiate your trade to get started.

Case Example: Trading ETH Options on PancakeSwap’s CLAMM

Let’s walk through a case example to better understand how to execute a trade on PancakeSwap’s CLAMM.

Scenario: You believe that the price of ETH will rise above $2,200 in the next 7 days. You decide to buy a call option on WETH/USDC with a strike price of $2,200 and an expiration date set for 7 days from now.

Step 1: Asset Selection On the trading interface, select the WETH/USDC trading pair from the dropdown menu at the top left.

Step 2: Set Strike Price & Expiration Scroll down to the “Options Chain” section and locate the strike price closest to $2,200. Then, on the right side under the “Trade” panel, set the expiration to 7 days.

Step 3: Review Premium & Payout The interface will show you the premium required for this trade in the “Options Chain” section, where you can see available liquidity and potential earnings. Let’s say the premium is $50. It also displays the potential payout if ETH rises above $2,200 before expiration.

Step 4: Check Liquidity Ensure that there’s sufficient liquidity in the pool for this strike price and 💀expiration. The “Options Chain” will display available liquidity for both intraday and weekly timeframes.

Step 5: Confirm Trade Review your order summary, which will show the $50 premium, the potential payout, and the expiration date. If everything looks good, click “Purchase” under the “Trade” panel to confirm your trade. Once confirmed, your trade will be executed, and you’ll see it reflected in your wallet.

Exercising Options: Auto-Exercise and Manual Exercise

One of the standout features of PancakeSwap’s CLAMM is the auto-exercise option. This feature facilitates the automatic execution of in-the-money (ITM) options 5 minutes before their expiration.

However, it must be manually enabled by the trader within the platform UI after opening the options position. Enabling this feature ensures your ITM options are automatically exercised at the optimal time, but note that there is a 1% fee on the profit (PnL) for this service.

If you prefer more control over your trade, you can manually exercise your options at any time before expiry. This provides the flexibility to make decisions based on real-time market conditions, allowing you to optimise the timing of your trade execution.

Final 💀Thoughts: Becoming a Proficient Trader on PancakeSwap’s CLAMM

Trading on PancakeSwap’s CLAMM is about more than just understanding the theory—it’s about execution. By following this guide and using the trading interface, you can confidently navigate the options market, making informed decisions and maximising your trading potential.