❓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
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 if the option contract is exercised.
Physical Settlement	Settlement type that involves the physical delivery of the underlying asset (i.e. $ETH) on the settlement date if the option contract is exercised.
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: Deposit Phase: The Basic Vaults collect deposits from users, or roll-over deposits that users have had from the previous epoch. Auction in progress: At the start of each epoch, Thetanuts Finance conducts a blind auction where accredited market makers bid to buy option contracts sold by the Basic Vaults. Settlement: The winning market maker of each Basic Vault then proceeds to deposit the option premiums upfront into the Basic Vault. In Progress: After settlement, the epoch begins.
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.