What Happens If There Is a Bug in the Smart Contract Code Governing an Options Trade?

Due to the immutability of blockchains, a bug in a deployed smart contract is extremely difficult to fix. If a bug is exploited, it can lead to a permanent and irreversible loss of funds for the parties involved in the options trade.

The contract will continue to execute its flawed code, potentially allowing an attacker to drain collateral, prevent legitimate exercises, or lock assets forever. Unlike traditional finance where a trade can be reversed or legally challenged, the outcome of a buggy smart contract is often final.

This makes pre-deployment security audits and formal verification critically important.