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How Do LP Fees Relate to the Concept of an Options Premium?

Both are compensation (premium/fee) for taking on a defined risk (exercise/impermanent loss).
Greeks.Live28.10.25

How Do LP Fees Relate to the Concept of an Options Premium?

LP fees are analogous to an options premium because they represent the compensation an LP receives for taking on a specific risk, primarily impermanent loss, similar to how an options writer receives a premium for taking on the risk of being exercised against. The LP is essentially "selling" the option for traders to swap at the current price, earning a premium (fee) for providing this immediate liquidity.

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