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Modulis 7 Β· Dynamic management
4/5

Rotations β€” how the system reacts to price moves

The decision tree (in priority order)

Every time you check your position, go through these questions

  1. Is SOL β‰₯ 2x the debt level? β†’ REALIZE 25%
  2. Is SOL ≀ the short leg ($70)? β†’ FULL RESET
  3. Did SOL move Β±$5? β†’ DOWN/UP ROTATION
  4. Is DTE < 30? β†’ MANDATORY ROLL
  5. None of the above? β†’ keep watching

1. Down rotation β€” price drops $5

Trigger: SOL hits the lower bound of the active tier ($85 β†’ $80).

Steps:

  1. Close the top tier ($85–$90, now 100% SOL) β€” the LP returns SOL
  2. Swap the SOL for USDC
  3. From that USDC, first repay $200 of the debt β€” enough to bring LTV back to 50% ($3,400 β†’ $3,200 at SOL $80)
  4. Only the remainder goes into a new bottom tier at $70–$75

Result: the structure shifts down ($70–75 / $75–80 / $80–85). LTV returns to ~50% only if you make that $200 repayment β€” without it the debt stays at $3,400 while collateral falls to 80 SOL Γ— $80 = $6,400, and LTV becomes 53.1%. It's the same principle as in lesson 7-2: every $5 move down in SOL = a ~$200 adjustment to the debt.

Cost: ~$40–60 realized loss per transition (in a monotonic downtrend).

2. Up rotation β€” price rises $5

Trigger: SOL rises $5 above the current structure.

Steps:

  1. Wait for the price to stabilize
  2. Close the bottom tier (if it's 100% USDC)
  3. Open two new tiers ($85–$90, $90–$95)
  4. Roll the options long leg $90 β†’ $95
  5. Leave the $70 short leg as is

Result: the structure sits higher, the options spread widens ($20 β†’ $25), max protection +$500.

3. Full reset β€” the options edge

Trigger: SOL reaches the short leg ($70).

Why the reset is necessary:

Steps:

  1. Close all LP positions
  2. Close the options position β€” its value will be close to, but below, the $2,000 maximum (the short $70 PUT still holds time value; with 60–90 DTE left expect ~$1,200–1,600). You'd only get the full $2,000 by holding to expiry, and under this cycle the position is still alive at that point
  3. Repay the entire Kamino debt
  4. Decide: start a new structure at $70, or step away

The discipline rule

Full reset = discipline, not an emotional decision. Even if it "feels" like the price is about to bounce β€” you stick to the trigger, and that's exactly what keeps you in control. Resetting at the edge lets you lock in the result yourself, while the position is still accurate, instead of letting hedge drift (the protection position no longer matching the actual risk) take control of the situation for you.

4. Profit realization β€” 25% at 2x

Trigger: SOL reaches 2x the debt level ($170, if you started at $85).

Math:

Steps:

  1. Close the LP (all tiers 100% USDC)
  2. Close the options (deep OTM β‰ˆ $0)
  3. Sell 20 SOL @ $170 = $3,400
  4. Repay the entire Kamino debt
  5. New state: 60 SOL, 0 debt, 0% LTV

Why exactly 25%, and not some other number?

OptionProblem
10% (8 SOL)Won't cover the full debt
25% (20 SOL)Covers the original debt exactly + leaves 60 SOL for upside
50% (40 SOL)Too much de-risking, you give up upside
100%Full exit (fine if the trade is over)

After realization β€” two choices

A β€” Fresh start: open a new structure at $170

B β€” Step away: hold the 60 SOL with no debt

The sequencing logic of rotations

Several rotations can happen within one 90-day options cycle. Example: SOL path $85 β†’ $95 β†’ $88 β†’ $98 β†’ $108 β†’ $170:

  1. $85β†’$95: up rotation
  2. $95β†’$88: down rotation
  3. $88β†’$98: up rotation
  4. $98β†’$108: up rotation
  5. $108β†’$170: repeated up rotations
  6. $170: profit realization

Over this trajectory: ~6–8 tier rotations + 1–2 options rolls + 1 profit realization. All with clear triggers β€” no emotional decisions.

When the triggers are defined in advance, it becomes possible to run this entire sequence calmly and consistently β€” every move already has its answer before you even see it.

Quick check
What is the first priority in the decision tree when checking a position?
Practice task
0 / 5
Write your rotation rules card

Rotations only work when the decisions are made IN ADVANCE β€” not in the heat of panic. Write your own β€œif X β€” I do Y” card and keep it somewhere visible. ~15 minutes.

The card is a commitment to yourself, not a forecast. Changing the rules mid-position is an emotional decision β€” exactly what the whole system is built to avoid.

This is learning, not investing β€” use only small amounts you treat as tuition.

You just wrote your rotation rules card with specific prices β€” your system now reacts to the market according to plan, not according to mood. Most people never do this.

LP ladder and optionsRoutine and risks

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