Vanilla Options on Top of HIP-4
HIP-4 extends way beyond prediction markets. We are building real vanilla options on Hypercall with native HIP-4 thresholds underneath them and portfolio margin that can finally credit the whole writer hedge stack.
A HIP-4 threshold is a tradeable boundary. Stack enough of them and you get strike-local shape that a perp cannot provide. That is exactly what a short option writer needs underneath a real vanilla book.
What is a HIP-4 threshold?
A binary option pays a fixed amount if the underlying is above the strike at expiry, and zero otherwise. No slope, no scaling with distance. Just a yes-or-no payout at one line in the sand. That is what a HIP-4 threshold market is.
Compare it to a vanilla call:
The vanilla call grows with distance above the strike. The binary is flat: above the line you get 1, below you get 0. One threshold is not a full option. It is one tradeable boundary.
HIP-4 is a general outcome-trading framework, but the canonical configuration people are already building on is European-style 1-day binary options on BTC and HYPE: the oracle checks spot at a fixed resolution time and posts 0 or 1. That is the exact form the writer hedge math in this article assumes. Stratium's native HIP-4 interface and heat.fi both list 1-day BTC binaries on Hyperliquid testnet.
| If BTC settles at 104k | YES = 1.00, NO = 0.00 |
| If BTC settles at 97k | YES = 0.00, NO = 1.00 |
| Why Hypercall cares | It is not a vanilla option. It is a clean strike-local payout that a short option writer can use under the book. |
The live market already prices this
This is not a hypothetical. Here is a real snapshot from April 9, 2026, BTC at $72,263 (Deribit index). Three markets, same underlying, same strike region.
| Strike | Distance | Deribit call | Deribit IV | Implied P(ITM) | Polymarket YES |
|---|---|---|---|---|---|
| 75k | +3.8% | $1,253 | 41% | ~27% | 69¢ |
| 80k | +10.7% | $305 | 41% | ~10% | 24¢ |
| 85k | +17.6% | $79 | 44% | ~4% | 7.3¢ |
| 90k | +24.5% | $28 | 48% | ~2% | 3.1¢ |
| 100k | +38.4% | $10 | 61% | ~0.5% | 0.6¢ |
Read it this way: the Deribit implied probability column is what a HIP-4 threshold would trade at, because HIP-4 is European-style (checks spot at a fixed time). The Polymarket column is what a one-touch contract at the same strike charges, which is a different question. Both are decaying the same way as strikes get further from spot, because they are pricing the same underlying world.
Two things jump out:
1. The vol market and the threshold market agree on shape. IV rises from 41% to 61% and implied probabilities drop from 27% to 0.5%. Both are saying the probability of crossing these levels decays fast but never reaches zero. That decay curve is what a short call writer has to hedge beyond their perp.
2. A vanilla call captures the whole curve. A binary captures one slice. An 85k call pays the full (S − 85k) at expiry. An 85k binary pays a flat 1. Both are useful: the vanilla is the product the writer sells, the binary is the building block underneath.
If Hypercall were listing a real April BTC call with a strike around 85k, the writer stack writes itself: the vanilla option on top, a long BTC perp for linear direction, and a strip of upside thresholds around 75k, 80k, 85k, 90k for strike-local shape. HIP-4 brings the threshold leg on-platform.
From one threshold to a ladder
One threshold is not enough. A short call writer who sold the 100k strike cares about 100k, then 110k, then 120k. The natural hedge object is a ladder. This is the mechanic behind static replication: a call can be decomposed into a portfolio of binaries held to expiry with no rebalancing.
The ladder starts to approximate the call payoff, but a finite set of thresholds cannot capture uncapped upside. The tail above the highest rung always remains.
The stack we are building
Put HIP-4 in the writer stack below it.
Walk through a concrete example: a writer sells a BTC June 100k call, hedges with a perp and a threshold ladder, and carries the residual tail.
| Listed option | BTC June 100k call |
| Direction | Perp hedge |
| Strike region | 100k / 110k / 120k thresholds |
| What stays open | Residual tail above the ladder |
| Spot | Call state | What helps | What remains |
|---|---|---|---|
| 95k | Mostly out of the money | Perp does most of the work | Threshold ladder is mostly inactive |
| 102k | Starts to turn on | 100k threshold becomes relevant | This is where a perp alone feels incomplete |
| 112k | Call is live | 100k and 110k thresholds are active | The hedge starts to pick up strike shape |
| 130k | Deep in the money | Ladder helps, tail remains | Residual upside is still uncapped and must stay margined |
What changes when HIP-4 enters PM
There are two portfolio margin engines in the picture, and the distinction matters.
Hypercall PM scores the options book. It runs scenario-based stress tests on vanilla calls and puts to compute the writer's required margin. This is the engine documented in Hypercall Portfolio Margin.
Hyperliquid PM scores HyperCore positions: perps today, and per Hyperliquid's portfolio margin docs, future HyperCore asset classes including HIP-4. This is the protocol-level engine that governs HyperCore-native assets.
Today these run independently. A writer's vanilla options sit in Hypercall PM's stress test. The perp hedge sits in Hyperliquid PM's stress test. Neither engine sees the other side of the book, so neither can credit the hedge.
The direction we are taking: Hypercall PM reads HyperCore positions directly. The perp and the HIP-4 threshold ladder get pulled into the same stress test as the vanilla options, inside Hypercall's engine. The writer's options book becomes the unified view. Hyperliquid PM continues to govern HyperCore assets at the protocol level; Hypercall PM layers on top, reading those positions into its own scenario grid to price the combined stack.
Once Hypercall PM sees the perp, the threshold ladder, and the vanilla liability in the same stress test, the writer's margin requirement can reflect the actual risk rather than treating each leg in isolation.
| Field | Before HIP-4 PM support | After HIP-4 PM support |
|---|---|---|
| Listed product | Vanilla call | Same vanilla call |
| Writer hedge | Perp | Perp + HIP-4 ladder |
| Strike-region hedge | Only via other options | Native thresholds at arbitrary levels |
| PM view | Partial book | Combined book |
| Capital effect | Direction gets credit | More strike-local relief |
The whole thing only works if the credit stays conservative. PM should only credit what is actually hedged.
| Scenario | Spot | Perp-only stress | Perp + HIP-4 | Read |
|---|---|---|---|---|
| Below strike | 95k | 44% | 44% | The ladder is mostly inactive here. |
| Right around strike | 100k to 105k | 72% | 36% | This is where thresholds begin to matter. |
| First breakout | 110k to 115k | 72% | 28% | Multiple thresholds are active. |
| Far above strike | 130k plus | 88% | 60% | The ladder helps, but the tail remains. |
No fake safety
Mismatched expiries, thin ladders, gaps above the highest threshold, and residual tails the hedge does not actually cover should all stay fully margined. Better capital efficiency does not mean pretending the risk is gone.
What actually changes
Today on Hypercall, a writer already has real tools:
| Today | With HIP-4 | |
|---|---|---|
| Margin model | Scenario-based PM | Same scenario-based PM |
| Hedging short gamma | Perps + other options | Perps + other options + HIP-4 thresholds |
| Strike-local shape | Only through other options | Native thresholds at arbitrary levels |
| Listed product | Real vanilla calls and puts | Same real vanilla calls and puts |
| PM book view | Options + perps | Options + perps + threshold ladder |
Nothing breaks. Everything you can do today still works. HIP-4 adds one new building block to the hedge inventory, and PM gets a richer view of the book when it is present.
What we ship first
Phase 1 | Writer hedge visibility HIP-4 positions show up next to perps and vanilla options in the same writer view. |
Phase 2 | Threshold ladder credit When HIP-4 gets PM support, aligned ladders start earning conservative relief in the strike region. |
Phase 3 | One-click writer packs Quote the option, suggest the perp plus HIP-4 stack, and preview the marginal IM before the order goes live. |
Further reading
Hypercall reference
- Binary Options - The single-rung primitive, with interactive Greeks
- Binary Static Replication - How a ladder of binaries approximates a vanilla call
- Scenario Grid - The 17 scenarios that score the combined book
- Pin Risk - What breaks the hedge near expiry
- Delta Hedging - Dynamic hedging mechanics and where the writer's edge comes from
- Portfolio Margin - Hypercall's scenario-based margin engine
- Black-Scholes - The pricing model used throughout
- Implied Volatility - What drives option prices
- Settlement - Hypercall's oracle TWAP settlement mechanics
External