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:

"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:

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:

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

OTM Settlement

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