Derivatives Contracts

A position on Optio is a position in an ERC-1155 smart contract

The two main types of contracts listed on Optio are European Call Options and European Put Options. More types of contracts may be listed in the future, but calls and puts and combinations thereof are excellent for managing risk, enhancing yield, or taking a view as to whether an asset will go up or down.

We worked closely with a number of stakeholders to develop a new ERC-1155 based standard for options on the blockchain (specifically on StarkNet written in Cairo).

The European Call

Purchasers of calls have the RIGHT to buy a particular asset (or 'underlying') at a specified price (or 'strike') at a specific time in the future (or 'expiration').

Sellers of calls have the OBLIGATION to sell the underlying at that strike price at expiration.

The European Put

Purchasers of puts have the RIGHT to sell a particular asset (or 'underlying') at a specified price (or 'strike') at a specific time in the future (or 'expiration').

Sellers of puts have the OBLIGATION to buy the underlying at that strike price at expiration.

The derivatives traded on Optio ARE smart contracts. They are created through a minting process that divides each contract into a set of rights, and a set of obligations. Sellers of contracts sell their rights for a price (or 'premium') using the Optio Order Book or Vault Mechanism and retain their obligations.

Collateral locked in the obligations contract is used to guarantee the payoff of both the Buyer (Long) and Seller (Short) of the contract.

A user who is both Long and Short a particular contract may combine these contracts to 'cancel' any obligations and unfreeze collateral to redeploy capital elsewhere.