Define “Stale Data” and Its Risk in Options Contract Settlement

Stale data is information that is outdated or not reflective of the current market reality. In options contract settlement, using stale data means the contract is executed based on an old, incorrect underlying asset price.

This can lead to significant unfairness, where one party gains or loses based on an erroneous price, especially in fast-moving markets. Oracles employ "heartbeat" updates and deviation thresholds to mitigate this risk.