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Glossary of Terms
This section seeks to provide insights on options as an asset class, and in the context of Thetanuts Finance. The below terms will be important to understand Thetanuts Finance products.
Term | Description |
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Long Call | Buying a call option gives the right to buy the underlying asset at the strike price upon option expiry. |
Long Put | Buying a put option gives the right to sell the underlying asset at the strike price upon option expiry. |
Short Call | Selling a call option creates an obligation to sell the underlying asset at the strike price upon option expiry to the buyer of the call option. In exchange for selling the call option, writers (or sellers) receive an option premium. |
Short Put | Selling a put option creates an obligation to buy the underlying asset at the strike price upon option expiry to the buyer of the put option. In exchange for selling the put option, writers (or sellers) receive an option premium. |
Underlying Asset | The asset in which a derivative instrument (i.e. an option) is based off of. |
Strike Price | The price at which the underlying asset can be bought or sold once an option is exercised. |
Tenor | The length of time until option expiry. In the context of the Basic Vaults, users would see "Weekly" or "Bi-weekly" - indicating the tenor of option, along with a countdown to option expiry. |
European Styled | Options that may only be exercised at the expiration date of the option, i.e. at a single pre-defined point in time. |
Settlement | The process of fulfilling the terms of an options contract when the option is exercised — options may either be cash-settled or physically-settled.
In the context of the Basic Vaults, the option contract buyer (i.e. accredited market maker) will have the right to exercise the option contract if it is in-the-money ("ITM"). |
Cash Settlement | Settlement type that involves the delivery of the net cash amount on the settlement date of the options contract. |
Physical Settlement | Settlement type that involves the physical delivery of the underlying asset (i.e. $ETH) on the settlement date of the options contract. |
Epoch | An epoch is a period of time in which a Basic Vault is run. For a Basic Vault with Weekly tenor, each epoch will run for a period of one week.
An epoch is split into a few distinct phases:
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Basic Vault LP Tokens | $XYZ-C (Call Basic Vault LP Token) and $XYZ-P (Put Basic Vault LP Token) represent fungible and transferrable tokenized Basic Vault positions – and form the backbone of all trading strategies on Thetanuts Finance v3. |
Last modified 17d ago