> For the complete documentation index, see [llms.txt](https://docs.ithacaprotocol.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.ithacaprotocol.io/docs/ithaca-app/trading/market/options.md).

# Options

## Options Overview

An option allows the buyer the right, but not the obligation, to buy or sell a set quantity or value of a particular asset at a fixed price by a set date.

**A Call Option** gives the buyer the **right to buy** an asset at the strike at contract expiry.

**A Put Option** gives the buyer the **right to sell** an asset at the strike at contract expiry.

The option buyer pays premium at inception and receives a payout depending on the value of the asset at expiry (cash settled). 

## Placing Option Orders

<figure><img src="/files/P3g8O1EHun2wvPux3GVq" alt=""><figcaption></figcaption></figure>

1. In the **Market** tab, select 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 price. 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

The payoff diagram displays the payoff of the entered trade at expiry already taking contract size into account.

## Options Contract

<table><thead><tr><th width="202">Item</th><th>Description</th></tr></thead><tbody><tr><td>Products</td><td><p>Call Option (Call)</p><p>Put Option (Put)</p></td></tr><tr><td>Payout Formula</td><td>Call    Max ( Reference Price – Strike Price , 0 )<br>Put     Max ( Strike Price – Reference Price , 0 )</td></tr><tr><td>Underlying</td><td>WETH/USDC</td></tr><tr><td>Settlement Style</td><td>Ithaca settlement</td></tr><tr><td>Exercise Style</td><td>European, auto-exercised</td></tr><tr><td>Premium Currency</td><td>USDC</td></tr><tr><td>Settlement Currency</td><td>Depending on user’s portfolio subject to collateral optimization settlement currency could be different</td></tr><tr><td>Strike Currency</td><td>USDC</td></tr><tr><td>Collateral Currency</td><td><p>Call    WETH</p><p>Put     USDC</p></td></tr><tr><td>Collateral Amount</td><td><p>Call    1 Underlying unit</p><p>Put     amount equal to Strike Price</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>Strike Price</td><td>Fixed standardized published levels</td></tr><tr><td>Reference Price</td><td>ITHACA Reference Fixing</td></tr><tr><td>Expiry Time</td><td>0800hrs UTC Friday</td></tr><tr><td>Expiry Dates</td><td>( Ithaca Expiry )</td></tr></tbody></table>

##