This repo contains the smart contract for options trading on Strike Finance. V1 implementation of options trading on Strike Finance will be p2p (peer-to-peer). We understand Cardano has a liquidity problem and is currently exploring a pooled options alternative. This is an American Options platform, where users will have the right, but not the obligation, to exercise their contracts.
An option contract gives the holder the right to buy or sell an asset at a predetermined price before a certain date. In options contracts, there are puts and calls. A put option allows the holder to sell an asset at a specific price, while a call option allows the holder to buy an asset at a specific price. Traders buy put options when they anticipate an asset will decline in value and call options when they anticipate an asset will rise in value.
Call Option:
- Gives the right to buy assets at a certain price
- Issuer locks up ADA or other CNTs
- When exercised, the holder sends stablecoins to the issuer and redeems the locked ADA or CNTs
Put Option:
- Gives the right to sell ADA or CNTs at a certain price
- Issuer locks up stablecoins
- When exercised, the holder sends ADA or CNTs to the issuer and receives stablecoins