An option is a contract granting the right – but not the obligation – to buy or sell an asset at a fixed price. This section covers options from first principles up through the fully-collateralized, on-chain derivatives Bitsy builds: cash-backed synthetic options.
The pages divide into four layers, each building on the one before.
Fundamentals#
The vocabulary every other page assumes: the option type distinction (call vs. put), the strike price, and the pricing sensitivities – implied volatility and the option Greeks. Volatility itself is treated as a general DeFi concept and lives at the DeFi top level.
Spreads and Strategies#
Multi-leg structures that combine options to shape a payoff curve: the option spread in general, the vertical spread specifically, the expiry-free perpetual option, the notion of a risk-defined strategy, and how all of these can be emulated with DeFi primitives such as concentrated liquidity-pool positions.
Directional Bets#
The user-facing products: bull bets and bear bets, and the four spreads they package – bull call, bull put, bear call, and bear put.
Cash-Backed Synthetic Options#
Bitsy’s core derivative: the cash-backed synthetic option (CBSO), its smart-contract design, and the innovative claims it makes – full collateralization, no margin calls, and settlement in volatile currencies.
Wiki Pages#
- Option Type
- Call Option
- Put Option
- Strike Price
- Implied Volatility
- Option Greeks
- Option Spread
- Vertical Spread
- Perpetual Option
- Emulating Option Strategies in DeFi
- Risk-Defined Strategy
- Bear Bet
- Bull Bet
- Bear Call Spread
- Bear Put Spread
- Bull Call Spread
- Bull Put Spread
- Cash-Backed Synthetic Option
- Cash-Backed Synthetic Options Design
- Innovative Claims of CBSOs