What Is an “Options Token” and How Does It Derive Its Value?
An options token is a tokenized representation of a traditional options contract, typically following a standard like ERC-1155 or a custom options standard. It grants the holder the right, but not the obligation, to buy (call option) or sell (put option) an underlying asset at a specified price (strike price) before a specific date (expiration).
Its value is derived from the price of the underlying asset, the strike price, time to expiration, and volatility, following established models like Black-Scholes, but implemented on-chain.
Glossar
Options Token
Instrument ⎊ An Options Token is a standardized, blockchain-native digital asset that represents the rights and obligations of a traditional options contract, granting the holder the right, but not the obligation, to buy or sell an underlying asset at a specified strike price before or on a specific expiration date.
Strike Price
Reference ⎊ The Strike Price is the predetermined reference level set at the contract's inception against which the underlying crypto asset's spot price is compared at expiration or exercise.
ERC-1155
Standard ⎊ This refers to the Ethereum Request for Comment specification that defines a multi-token standard, allowing a single contract to manage both fungible and non-fungible assets simultaneously.
Expiration Process
Settlement ⎊ The expiration process for a derivative contract involves the final settlement of obligations between counterparties on the specified expiration date.
Underlying Asset
Foundation ⎊ The concept of an Underlying Asset, within cryptocurrency derivatives and financial markets, establishes the core reference point for valuation and risk transfer.