How Can Options Strategies, Such as a Straddle or Strangle, Be Used to Protect against Impermanent Loss from High Volatility in Either Direction?

A long straddle (buying both a call and a put option at the same strike price) or a strangle (same, but with different strike prices) can protect against impermanent loss. These strategies profit from large price movements in either direction.

Since impermanent loss is caused by significant price divergence, the profits from the straddle or strangle can be used to offset the IL incurred in the liquidity pool. However, the cost of purchasing the options (the premium) must be overcome for the strategy to be profitable.