Vault Depositor (Option Seller)
Option Sellers (Writers) should deposit assets as margin (collateral) to underwrite Option Contracts.ย
A Covered Call vault depositor is a covered call seller. The seller deposits the underlying assets (such as $SUI) as collateral to sell the call option and receives rewards (premium) either in underlying tokens (such as $SUI) or stablecoins (such as $USDC) after an auction ends.
If the buyer decides to execute the contract as the call option expires, the underlying asset deposited by the seller will be transferred to the buyer, that is, cash-settled in tokens.
Example
You deposit 1 SUI to sell 1 SUI call option.
- Duration: 7 days
- Current market price: 1 SUI = 10 USDC
- Strike price: 1 SUI = 15 USDC
- Contract Size: 1 SUI Call Option
- Reward: You get 0.0625 SUI before vault settlement
Case 1: When Settle Price โฆ Strike Price, you gain
If the price of SUI stays below 15 USDC when the call expires, the buyer will not execute the call.
- Market price at expiry: 1 SUI โฆ 15 USDC
- Strike price: 1 SUI = 15 USDC -> not executed by the buyer
- Vault Settlement: You donโt need to transfer SUI to the buyer
- Net PNL in SUI:
- You get 0.0625 SUI
- The buyer loses 0.0625 SUI
Case 2: When Settle Price > Strike Price, you may lose
If the price of SUI rises slightly to 16 USDC when the call expires, the buyer has the right to execute the call. At this time, the buyer gets 0.0625 SUI token from you. The amount is equal to the difference between the market price and the strike price at expiry.ย
- Market price at expiry: 1 SUI = 16 USDC
- Strike price: 1 SUI = 15 USDC -> executed by the buyer
- Vault Settlement: The buyer gets [ (16 - 15) / 16 ] =ย 0.0625 SUI from you
- Net PNL in SUI:
- You are breakeven ( 0.0625 SUI - 0.0625 SUI = 0 SUI )
- The buyer is breakeven too
If the price of SUI rises strongly to 20 USDC when the call expires, the buyer has the right to execute the call. At this time, the buyer gets 0.25 SUI token from you. The amount is equal to the difference between the market price and the strike price at expiry.ย
- Market price at expiry: 1 SUI = 20 USDC
- Strike price: 1 SUI = 15 USDC -> executed by the buyer
- Vault Settlement: The buyer gets [ (20 - 15) / 20 ] =ย 0.25 SUI from you
- Net PNL in SUI:
- You lose 0.1875 SUI ( 0.0625 SUI - 0.25 SU = -0.1875 SUI )
- The buyer gets 0.1875 SUI
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A Call Selling vault depositor is a call seller. The seller deposits stablecoins (such as $USDC) as collateral to sell the call option and receives rewards (premium) in stablecoins (such as $USDC) after an auction ends.
If the buyer decides to execute the contract as the call option expires, the stablecoins deposited by the seller will be transferred to the buyer, that is, cash-settledย in stablecoins.
Exampleย
You deposit 10 USDC to sell 1 SUI call option.
- Duration: 7 days
- Current market price: 1 SUI = 10 USDC
- Strike price: 1 SUI = 12 USDC
- Contract Size: 1 SUI Call Option
- Reward: You get 1 USDC before vault settlement
Case 1: When Settle Price โฆ Strike Price, you gain
If the price of SUI stays below 12 USDC when the call expires, the buyer will not execute the call.
- Market price at expiry: 1 SUI โฆ 12 USDC
- Strike price: 1 SUI = 12 USDC -> not executed by the buyer
- Vault Settlement: You donโt need to transfer USDC to the buyer
- Net PNL in USDC:
- You get 1 USDC
- The buyer loses 1 USDC
Case 2: When Settle Price > Strike Price, you may lose
If the price of SUI rises slightly to 13 USDC when the call expires, the buyer has the right to execute the call. At this time, the buyer gets 1 USDC from you. The amount is equal to the difference between the market price and the strike price at expiry.ย
- Market price at expiry: 1 SUI = 13 USDC
- Strike price: 1 SUI = 12 USDC -> executed by the buyer
- Vault Settlement: The buyer gets ( 13 - 12 ) = 1 USDC from you
- Net PNL in USDC:
- You are breakeven ( $1 - $1 = $0 )
- The buyer is breakeven too
If the price of SUI rises strongly to 15 USDC when the call expires, the buyer has the right to execute the call. At this time, the buyer gets 3 USDC from you. The amount is equal to the difference between the market price and the strike price at expiry.ย
- Market price at expiry: 1 SUI = 15 USDC
- Strike price: 1 SUI = 12 USDC -> executed by the buyer
- Vault Settlement: The buyer gets ( 15 - 12 ) = 3 USDC from you
- Net PNL in USDC:
- You lose 2 USDC ( $1 - $3 = -$2 )
- The buyer gets 2 USDC
๐๐ป Start Earning: Deposit๏ปฟ
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๐ Read More: Depositor Guide๏ปฟ
A Put Selling vault depositor is a put seller. The seller deposits stablecoins (such as $USDC) as collateral to sell the put option and receives rewards (premium) either in underlying tokens (such as $SUI) or stablecoins (such as $USDC) after an auction ends.
If the buyer decides to execute the contract as the put option expires, the stablecoins deposited by the seller will be transferred to the buyer, that is, cash-settledย in stablecoins.
Exampleย
You deposit 10 USDC to sell 1 SUI put option.
- Duration: 7 days
- Current market price: 1 SUI = 10 USDC
- Strike price: 1 SUI = 8 USDC
- Contract Size: 1 SUI Put Option
- Reward: You get 1 USDC before vault settlement
Case 1: When Settle Price โง Strike Price, you gain
If the price of SUI stays above 8 USDC when the put expires, the buyer will not execute the put.
- Market price at expiry: 1 SUI โง 8 USDC
- Strike price: 1 SUI = 8 USDC -> not executed by the buyer
- Vault Settlement: You donโt need to transfer USDC to the buyer
- Net PNL in USDC:
- You get 1 USDC
- The buyer loses 1 USDC
Case 2: When Settle Price < Strike Price, you may lose
If the price of SUI decreases slightly to 7 USDC when the put expires, the buyer has the right to execute the put. At this time, the buyer gets 1 USDC from you. The amount is equal to the difference between the market price and the strike price at expiry.ย
- Market price at expiry: 1 SUI = 7 USDC
- Strike price: 1 SUI = 8 USDC -> executed by the buyer
- Vault Settlement: The buyer gets ( 8 - 7 ) = 1 USDC from you
- Net PNL in USDC:
- You are breakeven ( $1 - $1 = $0 )
- The buyer is breakeven too
If the price of SUI decreases strongly to 5 USDC when the put expires, the buyer has the right to execute the put. At this time, the buyer gets 3 USDC from you. The amount is equal to the difference between the market price and the strike price at expiry.ย
- Market price at expiry: 1 SUI = 5 USDC
- Strike price: 1 SUI = 8 USDC -> executed by the buyer
- Vault Settlement: The buyer gets ( 8 - 5 ) = 3 USDC from you
- Net PNL in USDC:
- You lose 2 USDC ( $1 - $3 = -$2 )
- The buyer gets 2 USDC
Please note that stablecoins could be replaced by native tokens such as $SUI as well.
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A Call Spread vault depositor is a call spread seller. The seller deposits the underlying assets (such as $SUI) as collateral to sell the call spread option and receives rewards (premium) either in underlying tokens (such as $SUI) or stablecoins (such as $USDC) after an auction ends.
- Vault Depositors are selling a call at a lower strike price, and buying another call at a higher strike price, while
- Vault Bidders are buying a call at a lower strike price, and selling another call at a higher strike price.
If call buyers decide to execute the contract as the call expires, the underlying asset deposited by the seller will be transferred to the buyer, that is, cash-settled in tokens.
Example
You deposit 1 SUI to sell 1 SUI call spread option.
- Duration: 7 days
- Current market price: 1 SUI = 10 USDC
- Strike price A: 1 SUI = 13 USDC
- Strike price B: 1 SUI = 15 USDC
- Contract Size: 1 SUI Call Spread Option
- Reward: You get 0.07 SUI before vault settlement
Case 1: When Settle Price โฆ Strike Price A, you gain
If the price of SUI stays below 13 USDC when the call spread expires, the buyer will not execute the call at Strike price A and B.
- Market price at expiry: 1 SUI โฆ 13 USDC
- Strike price A: 1 SUI = 13 USDC -> not executed by the buyer
- Strike price B: 1 SUI = 15 USDC -> not executed by you
- Vault Settlement: You donโt need to transfer SUI to the buyer
- Net PNL in SUI:
- You get 0.07 SUI
- The buyer loses 0.07 SUI
Case 2: When Strike price A < Settle Price < Strike price B, you may lose
If the price of SUI rises slightly to 14 USDC when the call spread expires, the buyer has the right to execute the call at Strike price A. At this time, the buyer gets 0.07 SUI token from you. The amount is equal to the difference between the market price and the strike price at expiry.ย
- Market price at expiry: 1 SUI = 14 USDC
- Strike price A: 1 SUI = 13 USDC -> executed by the buyer
- Strike price B: 1 SUI = 15 USDC -> not executed by you
- Vault Settlement: The buyer gets [ (14 - 13) / 14 ] =ย 0.07 SUI from you
- Net PNL in SUI:
- You are breakeven ( 0.07 SUI - 0.07 SUI = 0 SUI )
- The buyer is breakeven too
Case 3: When Settle Price โง Strike price B, you lose
If the price of SUI rises strongly to 20 USDC when the call spread expires, the buyer has the right to execute the call at Strike price A, and you has the right to execute the call at Strike price B. At this time, the buyer gets 0.10 SUI token from you. The amount is equal to the difference between the market price and the strike price at expiry.ย
- Market price at expiry: 1 SUI = 20 USDC
- Strike price A: 1 SUI = 13 USDC -> executed by the buyer
- Strike price B: 1 SUI = 15 USDC -> executed by you
- Vault Settlement: The buyer gets [ (20 - 13) / 20 ] - [ (20 - 15) / 20 ] =ย 0.35 - 0.25 = 0.10 SUI from you
- Net PNL in SUI:
- You lose 0.03 SUI ( 0.07 SUI - 0.10 SUI = -0.03 SUI )
- The buyer gets 0.03 SUI
๐๐ป Start Earning: Deposit๏ปฟ
๐ Vault Analysis: Check Historial Performance๏ปฟ
๐ Read More: Depositor Guide๏ปฟ
