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.