Buying Options
Buying Options
Buying an option gives you leveraged exposure to a price move with strictly limited risk: the most you can ever lose is the premium you pay upfront. There are no margin calls and no liquidations — an option position can never be closed out from under you.
Calls and puts in one line each
A call profits if the price finishes above your strike at expiry — you're betting up. A put profits if the price finishes below your strike at expiry — you're betting down.
Walkthrough: buying an ETH call
Say ETH trades at $3,000 and you expect a move up this week.
Pick a strike. You choose $3,100. This is the price ETH must exceed at expiry for your option to pay.
Pick size and see the premium. You buy 1 contract (1 ETH notional). The app quotes your premium — a few dollars, paid once, in USDC. This is your total and maximum cost.
Wait for expiry. Nothing to manage. No funding fees accruing, no liquidation price to watch.
Settlement is automatic. At expiry the settlement price is read from the oracle:
ETH at or below $3,100 → the option expires worthless. You lose only the premium.
ETH above $3,100 → you're paid the difference, up to the cap.
The payout cap — know this before you buy
Your in-the-money profit is capped at 5% of the strike price per contract. With a $3,100 strike, the cap is $155 per contract:
$3,050
$0
$0 (out of the money)
$3,150
$50
$50 — below cap, paid in full
$3,255
$155
$155 — exactly at cap
$3,500
$400
$155 — capped
The cap is the reason your premium was a few dollars less than the premium charged elsewhere. You're buying the payout zone that actually occurs most of the time, and not paying for the rare tail beyond it.
Rule of thumb: capped options shine when you expect a move, not a moonshot. A 1–5% weekly move — the most common kind — pays you the same here as anywhere else, at a fraction of the cost, which means your return-on-premium is far higher.
Worked profit example
Premium paid: $4. ETH settles at $3,180. Payoff = $3,180 − $3,100 = $80 (below the $155 cap → paid in full). Profit = $80 − $4 = $76, a 19x return on premium. The same $80 payoff on a venue charging a $12 uncapped premium returns ~5.7x. (Premium figures illustrative; live quotes shown in-app.)
Who is on the other side?
Every option you buy is backed by real deposits in the dCDS pool — users who deposited ETH or stablecoins to earn your premium. Payouts are fully collateralized by the pool at all times, enforced on-chain: the protocol cannot sell you an option the pool can't afford to pay at its cap.
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