From 6d0a888c43912a9e9473092a9547cc5ca636205d Mon Sep 17 00:00:00 2001 From: apo77yon <126520850+apo77yon@users.noreply.github.com> Date: Wed, 22 Mar 2023 18:33:25 -0700 Subject: [PATCH] Update options.md --- MEV_and_trading/derivatives/options.md | 7 ++++++- 1 file changed, 6 insertions(+), 1 deletion(-) diff --git a/MEV_and_trading/derivatives/options.md b/MEV_and_trading/derivatives/options.md index dcc8df9..64f829d 100644 --- a/MEV_and_trading/derivatives/options.md +++ b/MEV_and_trading/derivatives/options.md @@ -9,7 +9,12 @@ * options can be thought of as "insurance-like" contracts where one pays a premium upfront. profits come from "disaster events", with **capped losses** and **unlimited upsides**. * purchasers of options receive the **right** to buy or sell the underlying asset at a predetermined **strike price**. **option chains** list **calls** (ability to buy the asset) and **puts** (ability to sell the asset) for a given expiration across a variety of **strikes**. * options also gives leverage by chasing cheaper premiums (e.g. shortening expirations). -* buy (call) vs. sell (put): +* options contracts contain the following information: + - nature of the right: from the option buyers’ perspective, to buy (call) or sell (put) the asset. + - specification and quantity of underlying asset (e.g., 1 BTC). + - strike (or exercise) price: the price paid or received for the asset if the option is exercised. + - expiration date: the last date the option can be exercised. + - rules for exercise and settlement.