> For the complete documentation index, see [llms.txt](https://docs.nondollar.life/autonomint/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.nondollar.life/autonomint/options/buying-options.md).

# 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.

1. **Pick a strike.** You choose $3,100. This is the price ETH must exceed at expiry for your option to pay.
2. **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.
3. **Wait for expiry.** Nothing to manage. No funding fees accruing, no liquidation price to watch.
4. **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**:

| ETH at expiry | Intrinsic value | You receive                       |
| ------------- | --------------- | --------------------------------- |
| $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.