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Glossary
An option pool of a specific term. It is the core smart contracts that interact with user accounts. Users can call functions within the battle contracts to long options, add and withdraw liquidity, and settle positions.
A liquidity provider is someone that sells (goes short on) options on the platform. Liquidity providers are compensated with transaction fees and premiums.
Liquidity providers deposit collateral to make sure they can cover the short options positions in the case of option exercises at expiry.
When a short position is created, the liquidity provider must choose the lower and upper option selling price which represents the position's boundaries.
Refers to options bought by traders with the expectation that they will rise in value.
Spears and Shields are tokenized digital call options and digital put options. They're minted as fungible tokens by the smart contract.
A virtual European-style digital call option, with the right to receive one collateral when the settlement price of the underlying exceeds the strike price, otherwise, it expires worthless.
A virtual European-style digital put option, with the right to receive one collateral when the price of the underlying asset settles below the strike price, otherwise, it expires worthless.
The price for digital options quoted in collateral units. At any given time, the call option price and the put option price shall always add up to one collateral unit.
A third-party service or software that collects and updates the underlying asset prices used for settling options. The oracle receives asset prices during specified time slots and supplies them to smart contracts that use them to determine the settlement price of options.
A bonding curve that determines the price of options and facilitates the sale of those options.
The boundaries between discrete areas in price space. Ticks are spaced such that an increase or decrease of 1 tick represents a % increase or decrease in the option price.
Defined risk positions offer a maximum profit and loss potential, while undefined risk positions can theoretically generate unlimited profit and loss. Digital options, by nature, are defined risk instruments that provide traders and liquidity providers with a specific level of risks.
Premium refers to the price paid by traders to liquidity providers for a digital call option or digital put option. It is the income received by liquidity providers for selling these options.
Any interval between two price ticks of any distance.
If option price is within the price boundaries set by liquidity providers, the position is said to be in range and will earn tx fees and premiums. As the option price rises or falls, it may move outside the price boundaries. When the price goes beyond a position's lower or upper boundary, the position becomes out of range and no longer earns tx fees or premiums.
The total number of options positions that are opened and have not been exercised.
Moneyness refers to the relative position of the current price of an underlying in relation to the strike price of the option. If the option would have positive value if it were to expire today, it is said to be "in the money" (ITM); if it would be worthless if expiring with the underlying at its current price, it is said to be "out of the money" (OTM); and if the current underlying price and strike price are very close, it is said to be "at the money" (ATM).
The gross number of call options and put options that a short position has sold.
The net short status of a short position, after offsetting calls and puts that are sold.
After expiration, the option seller (liquidity provider) will be assigned the obligation to payout one collateral unit for each option token he sold that expires in the money.
Last modified 1mo ago