How options work on Phasis
A concise primer on calls, puts, strikes, expiries, and cash settlement for traders new to on-chain options.
What is an option?
An option gives its buyer the right — but not the obligation — to receive the payoff of the underlying asset at a fixed price (the strike) on a specific date (the expiry).
- Call option: Profits when the underlying price is above the strike at expiry. The buyer pays a premium upfront to obtain this right.
- Put option: Profits when the underlying price is below the strike at expiry. The buyer likewise pays a premium upfront.
The seller of an option collects the premium immediately in exchange for taking on the obligation to pay any intrinsic value at expiry.
Phasis-specific mechanics
European-style, cash-settled
All options on Phasis are European-style: they can only be settled at expiry — there is no early exercise. At expiry the protocol does not physically transfer the underlying asset. Instead, it pays the intrinsic value in USDC directly to the option holder:
| Option type | Intrinsic value at settlement |
|---|---|
| Call | max(0, settle_price − strike) |
| Put | max(0, strike − settle_price) |
If you hold a long call with a $60,000 BTC strike and the settle price is $62,500, you receive $2,500 USDC per contract. If the option expires out-of-the-money the payout is zero; your maximum loss is the premium you paid.
Expiries and strikes
Phasis lists a set of series per underlying (SUI, BTC, ETH):
- Weekly expiry: Settling the following Friday
- Monthly expiry: Settling on the last Friday of the month
- Strikes per expiry: Five strikes spaced around the current at-the-money price (roughly ±2 standard deviations)
Each combination of (underlying, expiry, strike, call/put) is called a series and has its own independent order book.
Position types
Long (buy): You paid a premium and own the right. Maximum loss is the premium. No margin required beyond the premium itself.
Short (sell): You collected the premium and owe any intrinsic value at expiry. Naked shorts require margin held in your account throughout the life of the position.
Spreads: A combination of a long and a short in the same expiry. A bull call spread, for example, is a long ATM call paired with a short OTM call. The long leg caps the maximum loss; the short leg reduces the net premium paid. Well-constructed debit spreads can carry zero margin lock.
Straddles / strangles: Long or short both a call and a put at the same expiry. Long straddles profit from large moves in either direction; short straddles collect premium but require margin.
Key points to remember
- No physical delivery — settlement is always in USDC.
- Premium is the maximum loss for buyers — once paid, there is no additional liability.
- Short positions require margin — the protocol holds USDC as collateral throughout the position's life.
- All matching is on-chain — orders sit on a DeepBook v3 order book; there is no off-chain matching engine.
Continue to Placing an order to see how to interact with the protocol.