# options

**Published by:** [opikun](https://paragraph.com/@opikun/)
**Published on:** 2023-10-26
**URL:** https://paragraph.com/@opikun/options

## Content

An option is a contract under which the holder obtains the right (but not the obligation) to purchase or sell a specific asset at a predetermined price, at a specified point in the contract. Options are of 2 types: Call Option - Asset Purchase Agreement Put-option - asset sale contract Example (Call): Coli has 1 ETH worth $1,800. He issues an option to buy this ETH from him in a week for $1,600. Vasya thinks that in a week 1 ETH will cost $2,200. And if he buys Kolya’s option, he can buy $1,600 right away in a week and sell $2,200 on the market. However, Vasa has to pay Kola a premium for the option, in the amount of $100. So, 1 ETH costs $1800, in a week there can be 2 scenarios: The market price is ETH <= $1600. You can still buy it from Koli, but the benefits are no. And Kolya got his $100 bonus from selling the option. The market price of ETH > $1600. Now Vasya wins as he can buy ETH below the market price. But don’t forget the $100 he paid Cole for the option. Swaps Swapping is a derivative of swap and option. That is, the owner of the swap reserves the right (but not obliged) to start the operation "swap" after some, predetermined, time.

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