Call

Call Options

A call option on Nexo Options is an on-chain contract that grants the buyer the right, but not the obligation, to purchase ETH or BTC at a fixed price within a specific timeframe. This makes call options a useful tool for traders who expect the market price of an asset to rise.

How Call Options Work

When opening a call option, the buyer must define:

  • Size: the number of contracts they wish to acquire.

  • Period: the lifespan of the option (in days).

  • Strike Price: the fixed price at which the asset can be purchased.

Once these parameters are chosen, the premium is calculated. The buyer pays this premium in USDC.e, and in return, they receive an ERC721 option token. This token acts as proof of ownership of the call option.

After the blockchain confirms the transaction, the buyer can exercise the option at any time before it expires. Exercising allows them to benefit if the market price is higher than the strike price.

A call option is considered a bullish instrument because buyers profit when the underlying asset increases in value.

How to Exercise a Call Option

To exercise a call option:

  1. The buyer sends the ERC721 option token back to the Nexo Options protocol.

  2. The protocol automatically calculates the profit and transfers the corresponding amount of USDC.e to the buyer’s wallet.

Important conditions:

  • The option must be exercised before the expiration date.

  • The asset’s price must be above the strike price to generate profit.

All Nexo Options contracts are cash-settled, meaning no physical delivery of ETH or BTC occurs—profits are always paid in USDC.e.

Available Periods

Call option contracts can be set for durations ranging from 7 days to 90 days. Shorter periods are often used for speculative trades, while longer periods are preferred by traders looking to hedge or hold a position for more time.

Available Strike Prices

Buyers can choose from four strike prices for ETH or BTC call options:

  • ATM (At-the-Market): Equal to the current market price.

  • OTM (Out-of-the-Money): Three additional strikes above the market price.

    • Market Price + 10% = OTM Call Strike #1

    • Market Price + 20% = OTM Call Strike #2

    • Market Price + 30% = OTM Call Strike #3

Example

Let’s assume the current market price of ETH is $4,200.

The available strike prices would be:

  • ATM = $4,200

  • OTM #1 = $4,200 × 1.1 = $4,620

  • OTM #2 = $4,200 × 1.2 = $5,040

  • OTM #3 = $4,200 × 1.3 = $5,460

If ETH rises to $5,000 before the option expires, the buyer of a call option with a $4,200 strike will profit from the difference between the market price ($5,000) and the strike price ($4,200), minus the premium paid.

Why Use Call Options on Nexo Options?

  • Speculation: Gain exposure to ETH or BTC price increases without holding the asset.

  • Hedging: Protect against missing out on potential rallies while holding stablecoins.

  • Leverage: Amplify returns by controlling larger positions with smaller capital.

  • Flexibility: Choose from different strikes and timeframes to match your market outlook.

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