How Stryke Opened My Eyes to LP Positions as Options

I was scrolling through Twitter when I saw someone mention that Stryke (back then called Dopex) was letting LPs earn yield on out-of-range positions. My first thought was "how the hell does that work?"

Three rabbit holes later, I finally understood - and it completely changed how I think about concentrated liquidity.

Starting Point: My Dead Uniswap v3 Positions

Like many LPs, I had a bunch of Uniswap v3 positions that were out of range and earning nothing. One ETH/USDC position had been sitting above range for weeks - just 100% USDC, no fees, waiting for price to come back.

I'd accepted this as the cost of concentrated liquidity. You get higher fees when in range, but zero when out of range. Simple trade-off, right?

Then I learned what Stryke was doing with these positions.

The Stryke Pitch That Made Me Curious

Here's what caught my attention: Stryke was somehow turning these dead LP positions into yield-generating assets. They claimed you could deposit your out-of-range position and earn option premiums on it.

My initial reaction: "This sounds too good to be true."

But the more I dug in, the more it made sense. Let me walk through what I learned.

Understanding What Out-of-Range Positions Actually Are

First, I had to understand what happens when a position goes out of range. Let's use my actual position as an example:

Range: $2900-$3100
Starting position: 50% ETH, 50% USDC
ETH pumps to $3500
Ending position: 0% ETH, 100% USDC

Here's the key insight from Stryke's docs: when you're sitting there with 100% USDC above your range, you've essentially committed to buying ETH at $3100 if price comes back down.

Think about that. ETH is at $3500, but you've promised to buy at $3100. That's... exactly what a put option is.

The "Wait, What?" Moment

This is when it clicked. Let me break down what I realized:

Regular put option:

I sell you the right to sell ETH to me at $3100
You pay me a premium for this right
If ETH drops below $3100, you exercise and I buy

My out-of-range LP position (above range):

I've committed to buy ETH at $3100 when price returns
I get paid... nothing
When ETH drops below $3100, I automatically buy

Same commitment, same risk, but LPs don't get the premium. We're giving away free options.

How Stryke Monetizes This

Here's where Stryke's innovation comes in. They looked at this situation and built a simple solution:

You deposit your out-of-range LP position
They sell actual options that match your LP commitment
Option buyers pay premiums
You get those premiums

It's not creating new risk - you already committed to these trades through your LP position. Stryke just found a way to get you paid for it.

My First Experiment With It

I decided to try it with one of my smaller positions:

Deposited a $5,000 position (all USDC, range $2900-$3100, ETH at $3500)
Stryke sold $3100 strike puts against it
Earned about 2.5% in my first month ($125)

When ETH eventually came back to $3050, the options got exercised and my LP position handled the buy automatically.

The whole thing just... worked.

Breaking Down What Could Have Happened

Looking back, I realize I got lucky with that first trade. Let me walk through all the scenarios that could have played out:

The Good Scenario (What Actually Happened)

ETH dropped from $3500 to $3050
Put options got exercised at $3100
My LP position started buying ETH as price entered my range at $3100
It continued buying ETH all the way down to $3050 (average buy ~$3075)
I kept the $125 premium
Net result: Bought ETH at effectively ~$3050 average (after premium adjustment)

The Better Scenario (If ETH Stayed High)

ETH stays above $3100 for the month
Put options expire worthless
I keep the $125 premium
My position stays 100% USDC
I can sell new puts next month
Net result: Pure profit, position unchanged

The Bad Scenario (ETH Crashes)

Here's what kept me up at night after I understood the risks:

What if ETH crashed to $2000?
Put options get exercised at $3100
LP starts buying ETH at $3100 and continues buying down to $2900
Then I'm 100% ETH at average price ~$3000 while ETH is at $2000
The $125 premium barely dents the $1000 loss per ETH
Net result: Down ~33% even with the premium

The Ugly Scenario (ETH Briefly Dips Then Moons)

This one actually happened to a friend:

ETH drops to $3050, puts get exercised
LP starts buying ETH at $3100 down to $3050
Only converts ~25% of USDC to ETH (since it only went halfway through the range)
ETH immediately rockets to $4000
Without Stryke: Could have stayed in USDC and bought later
With Stryke: Forced to start buying at $3100, but only partially converted
Net result: Mixed - you own some ETH at ~$3075 avg, but still mostly USDC

What This Taught Me About Risk

The key insight: Stryke doesn't add new risk, but it does lock in your commitment.

Without Stryke:

Your LP position will start buying ETH at $3100 and continue through your range
But you can withdraw anytime before that happens

With Stryke:

Same gradual buying through your range ($3100 down to $2900)
But you can't withdraw during the option period
You get paid for this lockup

The important detail: Your LP doesn't buy all ETH at once. It gradually converts USDC to ETH as price moves through your range. At $3050, you're only ~50% converted. At $2900 or below, you're 100% ETH.

It's like the difference between:

"I'll buy your house if you want to sell" (can change mind)
"I'm contractually obligated to buy your house" (locked in, but paid upfront)

What This Means for LP Strategy

After using Stryke for a few months, here's how it changed my approach:

Before: Set tight ranges, stress when they go out of range, wait impatiently for price to return

After: Set ranges knowing that out-of-range positions can still earn, less stress about being wrong

The yields aren't massive - usually 2-5% monthly - but on positions that would otherwise earn zero? That's significant.

The Risks I've Noticed

Being honest about the downsides:

You're locked during option periods - Can't reposition until options expire
IL still exists - If ETH dumps while you're selling puts (above range), you're buying ETH at higher prices
Options might not always sell - Very wide ranges might not find buyers
Smart contract risk - It's another protocol layer on top of Uniswap

Why This Fascinates Me

What I love about this is how it reveals hidden dynamics in DeFi. Uniswap v3 LPs have been accidentally selling options since day one. It took teams like Stryke to recognize this and build infrastructure to monetize it.

It makes me wonder - what other implicit financial positions are we taking in DeFi without realizing it? What other yield is sitting there waiting to be captured?

Practical Takeaways

If you're LP'ing in Uniswap v3:

Understand you're implicitly selling options when out of range
Above range = selling puts (holding USDC), below range = selling calls (holding ETH)
Protocols like Stryke let you monetize this
It's not free money - same risks, but now with compensation

For me, it's become a standard part of my LP toolkit. When positions go out of range, instead of just waiting, I'm earning.

Resources That Helped Me Understand This

Stryke Documentation - Best place to start
Dopex's Original Posts - The OG explanations
Guillaume Lambert's Threads - Great technical breakdowns
Uniswap v3 Development Book - For understanding the underlying mechanics

The more I dig into DeFi, the more I realize how many of these opportunities exist. Teams like Stryke are finding inefficiencies and building solutions. That's what keeps me excited about this space.