Binary Put Option Contract on COMP token with maturity of 2 October 2020. Each contract pays 100 DAI at expiration if matures in-the-money.
Binary Call option, European style
UniswapV2 COMP->ETH->DAI on-chain spot price
Strike price, DAI
2 October 2020 8:00 UTC
100 DAI if COMP price is less than 120 DAI at maturity
premium at settlement minus any win of long
^capped by the initial margin
The derivative fee is 1% of the profit (only charges to profit makers) and received by derivative author
*Maximum risk of buyer; **Maximum risk of seller and maximum gain of buyer; option contract traded with open price with via order book
A binary option is a financial exotic option in which the payoff is either some fixed monetary amount or nothing at all.
This is a cash-or-nothing binary option. The seller pays some fixed amount of cash if the option expires in-the-money while the buyer pays the agreed premium to the seller.
All margin on Opium.Exchange is denominated in stable coins or any ERC20 coins, allowing traders to speculate on the future value of its products only using stable cryptocurrency or other Ethereum based tokens.
"European style" means options cannot be exercised before expiration, but can only be exercised at expiration.
"Cash settled" means when a cash settled option is exercised the writer of the contract pays any profit due to the holder in stable coins (or any ERC20 coins specified in the contract) rather than any asset transfer taking place.