How Can a Portfolio of Derivative Contracts Mimic the Stability Mechanism of an Algorithmic Stablecoin?

An investor could use a combination of options and futures to create a synthetic stability mechanism. For example, buying put options on the stablecoin to profit from a de-peg (analogous to the mint/burn arbitrage) and selling call options to cap upside.

This derivative portfolio would dynamically adjust to market movements, similar to the algorithm.