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:
| Pay | Get | |
|---|---|---|
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 — 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:
| Pay | Get | |
|---|---|---|
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 — 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 Moby’s Clearing House, please refer to:
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
| Pay | Get | |
|---|---|---|
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
