What Is the Risk of Front-Running in Decentralized Options Trading?

Front-running occurs when a malicious actor observes a pending transaction (e.g. a large options trade) in the mempool and submits their own transaction with a higher gas fee to ensure it is executed first. This allows them to profit from the expected price movement caused by the original trade.

In options, it can be used to execute a favorable trade just before a large order is processed, manipulating the price or capturing a better premium.