Trading Options
Warning!
TON Hedge is currently in the alpha testing stage. Content of this section may change in the near future.
Overview
Options allow you to lock in an asset price for a fixed period, enabling you to earn profit from the price difference when you exercise the option.
With TON Hedge, you can buy cash-settled options for TON on-chain. Thus you can hedge your risks, or earn profit on sharp price movements. The straightforward interface is designed for both beginners and experienced traders.
Currently, only TON is supported as an underlying asset, but other assets like BTC and ETH will be added in near future. TON price is provided by RedStone and validated on-chain at the time of purchase.
There are two types of options available at the moment — Put and Call.
Put Options
A Put Option gives you the right to sell TON at the strike price, enabling you to earn profit in USDT from the price difference when you exercise the option. If you're bearish about TON, buying a Put Option protects your savings from a sudden price drop for a specified period of time.
Call Options
Buying a Call Option allows you to lock in the current TON price for a fixed period of time, securing a lower price for the future if the market price rises sharply.
Buying Option
To buy an option on TON Hedge, you need to choose:
Option type — Call or Put
Amount of options — 1 option covers 1 TON
Expiration date — from 1 day to 1 month. You can exercise option at any time during the period before expiration.
Strike price — The predetermined price at which the option can be exercised. You can only exercise Call options, when the current asset price is above the strike price, or is below the strike price for Put options. By default it is ATM (at-the-money, which means the current market price of the underlying asset at the moment of signing transaction for purchasing an option). It is also possible to set further strike prices to bet on higher volatility.
The option cost is paid once at the moment of purchase. It consists of the premium, which goes entirely to the liquidity pool, and the taker fee. The premium amount depends on the expiration date, strike price and volatility, typically equaling 1-10% of the underlying asset price. You can read details about option pricing here.
Once an option is purchased, the covered amount and premium are locked in the liquidity pool until the option is exercised or expires.
Exercising Option
The profit from exercising the option is paid in USDT directly to the options holder wallet, immediately after it is exercised.
PnL from exercising a Call option can be calculated using the formula:
Or using this formula for Put options:
Where:
N — Amount of options
M — Market price of the underlying asset at the moment of signing transaction.
S — Strike price
O — Option price
Option can be exercised at any time before the expiration date, if these conditions are met:
For Put Options, underlying asset market price must be below the strike price
For Call Options, underlying asset market price must be above the strike price
Transferring options
Since options are implementing NFT standard, users can transfer them to another wallet. This allows to manage positions across different accounts or trade options with others.
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