Glossary of Terms
Find below a glossary of the commonly used terminology used throughout Pods' material.
If we're missing any, please let us know on our Discord channel, and we'll add it to the list.
Term
Description
Underlying asset
The object asset of the contract, the asset on which the buyer wants to buy rights.
Strike price
The agreed price in which the buyer will be able to sell or buy the underlying asset to the seller at any moment until expiration.
Strike asset
The asset in which the strike price is fixed and the asset will execute the physical settlement.
Expiration date
The contract is valid until the expiration date.
Put
A put option describes the right to sell the underlying asset at the strike price.
Call
A call option describes the right to buy the underlying asset at the strike price.
Collateral asset
The collateral asset is the strike asset and has to be locked in the contract to mint PodOptions.
Premium
The premium is the option's price. It is the amount of DAI that the buyer has to pay for the seller to purchase an option.
PodOptions
It is our primitive. An ERC20 token that represents the option's contract rules.
PodPut
The token represents the buyer's right to sell the underlying asset at the strike price at any moment until expiration.
PodCall
The token represents the buyer's right to buy the underlying asset at the strike price at any moment until expiration.
Option Token
PodOptions are the Pods Protocol primitive. They can be either PodCalls or PodPuts.
AMM
Automated Market Maker.
Options AMM
Our options specific AMM.
Black Scholes
It is an options pricing formula widely used in traditional finance.
Liquidity Provider
It is the user that provides funds as liquidity to the AMM in exchange for trading fees.
Seller
It is the user that locks collateral in the contract and mint options tokens.
Buyer
It is the user that buys options from the AMM.
Implied Volatility
Implied Volatility is the market's forecast of a likely movement in the underlying asset spot price. In our model, the IV derives from the pool's activities and imbalance.
Time to expiration
Amount of time left to the option expiration date.
Impermanent loss
Potential loss a liquidity provider could get from providing liquidity to the AMM instead of holding the assets.
Impermanent gain
Potential gain a liquidity provider could have from providing liquidity to the AMM instead of holding the assets.
Last modified 5mo ago
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