shear
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Weekly covered calls
on xStocks

Deposit TSLAx. Each Monday the vault sells calls 5% above the market at a five-minute auction and pays the USDC premium to depositors. The stock stays in the vault.

Open the appRead the docs

Every lock is one possible week.

1,250 locks, spread the way a stock with 45% volatility can move in five trading days. Tall locks are the good weeks.

The blade is the strike.

Wool above it belongs to whoever buys the call. Everything below it stays with the depositors.

The wool above the blade sets the price.

Its average length, 0.82% of the stock, is the fair price of a one-week call struck 5% out of the money. The vault sells that call for USDC.

Wilder stocks grow longer wool.

At 70% volatility the same strike is worth 2.0% a week. It is also reached more often: in 29% of weeks instead of 21%.

Monday's auction sells all of it.

The premium is paid up front. Friday's close decides how much of the wool the buyer actually takes.

Strike +5.0%Premium 0.82% of the stockReached in 21% of weeks

Move over the fleece to set the strike. Click to shear.Tap the fleece to shear it at that height.

Example: a one-week call on a stock with 45% volatility.

One round, Monday to Friday

The schedule in New York time, drawn over an example price path for a $100 xStock.

The auction

Bids come in

For five minutes on Monday, approved market makers bid for the round’s calls. Each bid is a size and a top price per call, in USDC, held in escrow. Nine example bids here; a round takes up to sixteen.

Highest price first

The auction ranks the bids from the highest price down. The width of each block is how many calls it wants.

Filled up to the vault’s size

The vault holds 10,000 xStock, so it sells 10,000 calls. Bids fill in order until that runs out. The last one fills in part.

One price for everyone

Every winning bid pays the lowest winning price. The rest of each escrow goes back to its bidder, and the premium goes to depositors.

Calls sold
0
Clearing price
—
To depositors
$0
$0.30
$0.60
$0.90
5,00010,00015,000
CBidder C · 3,000 calls at $0.92 · filled, pays $0.80
GBidder G · 2,000 calls at $0.67 · not filled
ABidder A · 2,500 calls at $1.03 · filled, pays $0.80
EBidder E · 2,400 calls at $0.80 · 1,500 filled, pays $0.80
IBidder I · 2,200 calls at $0.52 · not filled
BBidder B · 1,800 calls at $0.97 · filled, pays $0.80
FBidder F · 1,500 calls at $0.73 · not filled
DBidder D · 1,200 calls at $0.85 · filled, pays $0.80
HBidder H · 1,000 calls at $0.58 · not filled
Vault size, 10,000
Clearing $0.80

Price per call, in USDC, against the number of calls each bid wants. Example bids.

Friday 16:00, whatever the close

The round settles on Pyth’s price for the last second of Friday’s regular session. Under the strike, the calls expire worthless. Over it, each call pays (price − strike) ÷ price in xStock, so the gain above the strike goes to the buyer.

Friday close$112.00+12.0% on the week
Just holding+12.00%
In Shear+5.80%
Shear against holding−6.20%
−15%Friday close against Monday’s $100+20%

Each call pays (112.00 − 105.00) ÷ 112.00 = 0.0625 xStock. For every 100 xStock deposited you end the round with 93.75 xStock and $80.00 in USDC.

Market makers buy the calls

One-week calls on TSLAx, sold every Monday in a single auction to approved bidders.

Read the bidding guide
  1. 1

    Get approved

    The vault admin adds your wallet to the bidder list. Only listed wallets can bid.

  2. 2

    Bid on Monday

    Send a size and a top price per call, in USDC, in the five minutes after the open. The USDC waits in escrow.

  3. 3

    Claim and hold

    After the auction, collect your calls and any unused USDC. Calls are tokens you can move. In the money at Friday’s close, each pays (close − strike) ÷ close in TSLAx.

Depositors keep the stock

Deposit TSLAx and hold vault shares. Your part of every auction is paid in USDC.

Open the app
  1. 1

    Deposit

    Between rounds, shares are minted at once at the vault’s value. During a round, a deposit waits and joins after Friday’s settlement.

  2. 2

    Collect premium

    Premium accrues to your shares the moment each auction closes. Collect it in USDC whenever you like.

  3. 3

    Withdraw

    Between rounds, redeem at once. During a round, request a withdrawal: it pays out in TSLAx after settlement, and your shares still earn that round’s premium.