In Options Trading, What Is the Function of a Digital Signature on a Derivatives Contract?

A digital signature on a derivatives contract, particularly in decentralized finance (DeFi), provides non-repudiation and integrity. It cryptographically proves the intent and authorization of the contract's creator or counterparty, confirming the exact terms (e.g. strike price, expiration) were agreed upon by the private key holder.

This replaces the legal function of a wet signature, allowing for trustless execution via a smart contract and binding the parties to the agreement's terms.