Can Smart Contracts Be Used to Automate Options Trading Strategies?

Yes, smart contracts can automate options trading by encoding the terms of an options contract, such as strike price, expiration date, and premium. They can automatically execute the exercise or settlement of the option when market conditions or the expiration date are met.

This automation reduces counterparty risk and eliminates the need for a clearing house intermediary. Decentralized finance (DeFi) platforms use them for creating tokenized options.