How Can a Trader Reduce Their ADL Ranking Score?
A trader can reduce their ADL ranking score by taking two main actions: reducing their position's leverage and reducing the size of their unrealized profit. Lowering leverage decreases the risk the position poses to the exchange, which is a key factor in the ranking.
Taking partial profits or hedging the position can reduce the unrealized profit, also lowering the score. The goal is to move to a lower ADL priority tier.
Glossar
Adl Ranking System
Algorithm ⎊ ⎊ The Adl Ranking System represents a quantitative methodology employed within cryptocurrency derivatives markets, specifically designed to assess the relative attractiveness of options strategies based on implied volatility skew and term structure analysis.
ADL Ranking
Calibration ⎊ The ADL Ranking, within cryptocurrency derivatives, represents a volatility surface calibration metric, assessing the accuracy of implied volatility models against observed option prices.