How Do Oracles Provide Necessary Data for Decentralized Options Pricing?

Oracles are decentralized data feeds that securely bring real-world and off-chain information onto the blockchain for use by smart contracts. For options pricing, oracles provide critical, real-time data points such as the underlying asset's spot price and, crucially, its implied volatility.

This data ensures that the options protocol's pricing mechanism, whether AMM or Black-Scholes based, uses an accurate and tamper-proof input, which is essential for fair premium calculation and preventing manipulation.