How Do Oracles Facilitate the Calculation of Option Premiums?

Oracles facilitate the calculation of option premiums by providing the essential, real-time input variables required by option pricing models like Black-Scholes. The primary input is the current, accurate spot price of the underlying asset.

They may also provide other necessary inputs, such as a reliable risk-free interest rate. The options protocol then uses these inputs, along with strike price, time to expiration, and implied volatility, to calculate the fair premium.