How Do Options and Futures Contracts Relate to a DAO’s Treasury Risk Management?

Options and futures contracts are used by a DAO treasury primarily for hedging against price volatility of its underlying crypto assets. For example, selling call options on a portion of their native token holdings can generate premium income while limiting upside exposure.

Futures contracts can be used to lock in a future selling price for an asset, protecting the treasury from a sudden market downturn. These derivatives allow for sophisticated risk mitigation and yield generation.