Options Pricing

The price of an option (also called a premium) is amount of USDC that the buyer (holder) of an option pays to the seller (writer) in order to receive a payout when the underlying asset reaches the strike level.

If you want to simply buy or sell options, you can do that via Uniswap pools. It is more tricky if you want to provide initial liquidity to the pool. It requires you to be able to price the American binary option for the given instrument.

Liquidity providers should be able to define the American binary options pricing models for the instruments available on Oiler. An example formulas for pricing similar instruments with some assumptions can be found here.