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mev-toolkit/MEV_and_trading/derivatives/options.md
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Update options.md
2023-03-22 18:35:47 -07:00

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options


tl; dr


  • options can be used to speculate on the future price and volatility of an asset, and to manage risks in a portfolio.
  • 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).
  • 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.


protocols


thales

  • decentralized binary options protocol that a group of Synthetix community members spun in 2020.
  • if held until expiry, binary options have only two payoff possibilities: a predetermined amount of profit or nothing.
  • relies on Synthetix's sUSD stablecoin for minting its binary options tokens and as the platform's unit of account.

lyra.finance

  • chains: arbitrum, optimism, ethereum
  • decentralized options trading protocol powered by a specialized AMM system.
  • it uses synthetix's sUSD stablecoin as its exclusive quote asset, so traders pay for opening long positions or closing short positions with sUSD.
  • uses synthetix as a one-stop protocol for getting long and short exposure on its markets' base assets (delta hedging).
  • guide to trade on lyra

hegic

  • chains: arbitrum, ethereum

siren

  • chain: polygon

whiteheart

  • chains: ethereum

premia

  • chains: ethereum, arbitrum, fantom, optimism

kwenta


external resources