How to Open / Close / Settle Position

Open Position

General

  • Traders can open long/short positions for a call/put option with various maturities

  • One of the OLPs acts as a counterparty, providing liquidity for the position traders wish to open; below is a summary of what traders pay and get for opening a position:

PayGet

Open Long Position

- Assets at *Execution Price

- Trading fee

- Long Position Token from corresponding OLP

Open Short Position

- Collateral

- Short Position Token from corresponding OLP

- Execution Price

"Execution Price" - Equal to options premium value at the time of transaction settlement.

Transaction

  • Process: First-come-first-serve sequence at Execution Price

  • Execution Price: Determined by adding the Mark Price and Risk Premium

    • Mark Price: Calculated using the Black-76 model, real-time futures prices, and implied volatility from market-synced CEX data

    • Risk Premium: Calculated on a real-time basis based on corresponding OLP's Greeks

Other Features โ€” Leverage Trading via Prime Brokerage

  • Leverage trading will be supported in the near future via Prime Brokerage Pool, a separate pool that does not impact OLP's assets and thereby ensures 100% settlement for all option positions on Moby

Close Position

General

  • Traders can close long/short positions for a call/put option before expiration

  • One of the OLPs acts as a counterparty, providing liquidity for the position traders wish to close; below is a summary of what traders pay and get from closing a position:

PayGet

Close Long Position

- Return Long Position Token

- Assets equivalent to the Execution Price

Close Short Position

- Return Short Position Token

- Remaining asset minus Execution Price of Long Position Token

Transaction

  • Process: First-come-first-serve sequence at Execution Price

  • Execution Price: Determined by adding the Mark Price and Risk Premium

    • Mark Price: Calculated using the Black-76 model, real-time futures prices, and implied volatility from market-synced CEX data

    • Risk Premium: Calculated on a real-time basis based on corresponding OLP's Greeks

Other Features โ€” Netting via Clearing House

  • Clearing House conducts netting for OLP and thereby increases capital efficiency

    • If there's a Long / Short Position Token pair with identical expiry and strike price, the pair is netted, and collateral is returned to restore OLP's assets

    • Netting positions with identical expiration but differing strike price limits the maximum payout and results in a smaller amount of required collateral

    • For further details regarding Mobyโ€™s Clearing House, please refer to:

pageEven Higher Capital Efficiency with Clearing House

Settle Position

General

  • Upon expiration of the options position, settlement is executed based on whether the options are classified as In the Money (ITM) or Out of the Money (OTM)

ITM Settlement

Pay

Settle Long

- Return Long Position Token

- Payoff based on Strike Price at Expiration

Settle Short

- Return Short Position Token

- Residual value of the collateralized asset, after the deduction of the payoff allocated to the Long Position Token holder

OTM Settlement

PayGet

Settle Long

- Return Long Position Token

- Option position settles worthless

Settle Short

- Return Short Position Token

- Reclaim the assets initially collateralized upon opening the position without any additional financial compensation

Last updated