# Digital Options

## Digital Options Overview

A **Digital Call Option** pays off a fixed amount **if underlying asset price ends up above** a certain level at expiry. 

A **Digital Put Option** pays off a fixed amount **if underlying asset price ends up below** a certain level at expiry. 

## Placing Digital Option Orders

<figure><img src="https://4105275983-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FveNlPcq5FcdKaOERYyrV%2Fuploads%2FNMKoHsi0DUfy1O9bCtbm%2Fimage.png?alt=media&#x26;token=13ebdeaf-4c5b-43db-82dd-cbe5a7e56617" alt=""><figcaption></figcaption></figure>

1. In the **Market** tab, select Digital Options
2. Enter your order parameters
   * **Type:** enter the contract you want to trade: CALL or  PUT&#x20;
   * **Side:**  "+" indicates a LONG/BUY position on the contract selected, "–" indicates a SHORT/SELL position on the contract selected. \
     (Note: a LONG PUT position is a SHORT position on the underlier)&#x20;
   * **Size:** The exposure equivalent of your desired asset. Entering 1 means you are trading an option contract for one unit of the underlier.&#x20;
   * **Strike:** The option strike price which will determine the payoff at maturity.&#x20;
   * **Unit Price:** This is the order limit price which will be entered into the auction. The system feeds a  suggested price, which is a theoretical mid price based on Ithaca protocol proprietary pricing model: these prices are not tradable neither are they guaranteeing a fill of entered. These prices are meant to help anchor a limit price to be entered that may have higher probability of a match. The indicated  implied volatility is calculated by the same model.&#x20;
3. Verify Order Summary
   * Order limit: Order price
   * Collateral requirement: The amount required to be locked so as to ensure that the order enters the auction.&#x20;
   * Platform fee: Fee to be paid in case of execution.&#x20;
   * Total premium: The total to be paid net of fees.&#x20;
4. "Submit to Auction" and approve your transaction in your wallet

## Digital Options Contract

<table><thead><tr><th width="202">Item</th><th>Description</th></tr></thead><tbody><tr><td>Products</td><td><p>Binary Call Option (Binary Call)</p><p>Binary Put Option (Binary Put)</p></td></tr><tr><td>Payout Formula</td><td>Call    if Reference Price > Strike then 1, else 0<br>Put     if Reference Price &#x3C;= Strike then 1, else 0</td></tr><tr><td>Underlying</td><td>WETH/USDC</td></tr><tr><td>Settlement Style</td><td>Ithaca settlement</td></tr><tr><td>Premium Currency</td><td>USDC</td></tr><tr><td>Strike Currency</td><td>USDC</td></tr><tr><td>Collateral Currency</td><td><p>Call    USDC</p><p>Put     USDC</p></td></tr><tr><td>Collateral Amount</td><td><p>Call    1 </p><p>Put     1</p></td></tr><tr><td>Collateral Management</td><td>Fully collateralized, pre-funded</td></tr><tr><td>Multiplier</td><td>1</td></tr><tr><td>Reference Price</td><td>ITHACA Reference Fixing</td></tr><tr><td>Expiry Dates</td><td>( Ithaca Expiry )</td></tr></tbody></table>

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