Minting Options

Writing - Minting and Selling options

What is Writing an Option?

Traders write an option by selling someone the right to buy or sell a crypto asset at a specific price (strike price) before or at a specific date (expiration date).

How to Mint a Call Option?

To mint one call option, you need to lock the underlying asset as collateral into the smart contract, then this token can be sold for a premium. This can be done by accessing "Mint" in the top menu of your dashboard and then going to Trade to sell the minted tokens.

Example: Writing 2 "ACO ETH-200USDC-C-26JUN20-0800UTC"

Action

Amount

You lock

2 ETH

You'll receive

2 "ACO ETH-200USDC-C-26JUN20-0800UTC"

After minting, you can go to Trade and sell those tokens for any price you would be willing to accept for assuming the obligation to sell 2 ETH for 400 USDC.

Only write a call option if you’d be comfortable selling the underlying asset at the strike price.

How to Mint a Put Option?

To mint one put option, you need to lock the strike price as collateral into the smart contract, then this token can be sold for a premium. This can be done by accessing "Mint" in the top menu of your dashboard and then going to Trade to sell the minted tokens.

Example: Writing 2 "ACO ETH-200USDC-P-26JUN20-0800UTC"

Action

Amount

You lock

400 USDC

You'll receive

2 "ACO ETH-200USDC-P-26JUN20-0800UTC"

After minting, you can go to Trade and sell those tokens for any price you would be willing to accept for assuming the obligation to sell 2 ETH for 400 USDC

Only write a put option if you’d be comfortable buying the underlying asset at the strike price.

When can you be assigned?

While the minted tokens remain on your wallet, you can't be assigned, but if you transfer or sell the tokens, you can be assigned at any time before expiration.

How can the writer of an option cancel the obligation before exercise or expiration?

If you have written an option and have not been assigned yet, you can cancel the obligation by buying back the same amount of tokens that were not assigned. You can't be assigned while the tokens remain in your wallet. If you want, you can remove your collateral before expiration by burning the ACO tokens. This can be done by accessing "Mint" in the top menu, and then, on the bottom section, clicking on "Burn to redeem collateral".

What happens if I am assigned?

As a writer of a call option, you are obligated to sell to the holder of the call option, the underlying asset at the strike price upon exercise. The corresponding amount of the strike price is sent directly to your wallet.

Example Call Assignment: Assignment of 2 "ACO ETH-200USDC-C-26JUN20-0800UTC" You'll receive 400 USDC and 2 ETH from your collateral will be sent to the holder exercising it.

Example Put Assignment: Assignment of 2 "ACO ETH-200USDC-P-26JUN20-0800UTC" You'll receive 2 ETH and 400 USDC from your collateral will be sent to the holder exercising it.

What happens if I am never assigned? How can I redeem my collateral back?

If you have written an option and are not assigned an exercise before it expires, you no longer have any of the obligations inherent in that contract, you are free to remove the collateral you supplied. This can be done by accessing "Mint" in the top menu, and then, on the bottom section, clicking on "Redeem collateral".