Vanilla Index Options
Introduction to the Initial Scope: European-Style Index Options (Under Consideration)
As the first phase of OLTA's Options Module, vanilla index options aim to provide a familiar and robust toolset for experienced users and institutions. These instruments are designed to offer transparent, on-chain access to basic options strategies anchored to OLTA's structured index funds.
What Are Vanilla Index Options?
Vanilla options are the simplest form of options contracts. In OLTA’s case:
European-style: They can only be exercised at the expiration date.
Cash-settled: At expiry, holders receive a payout in USDC based on the difference between the strike price and the final NAV of the index.
On-chain redeemable: Even if not claimed at expiry, payouts remain claimable on-chain at any time afterwards.
This model ensures operational simplicity while enabling core hedging and directional strategies.
Use Cases
Vanilla index options unlock key use cases:
Hedging: Protect against downturns with put options
Upside Exposure: Speculate on bullish moves with call options
Yield Enhancement: Sell covered calls or secured puts for premium income
These tools help manage risk while expanding OLTA’s utility for structured portfolio construction.
Example Use Case
An institutional investor holding $100,000 of the Core Index 10 can:
Buy protective puts to cap downside risk during volatile months
Sell covered calls at a higher strike to earn premium if no major upside is expected
This replicates common TradFi index management techniques, now made fully transparent and automated on-chain.
Eligibility & Risk Control
To maintain market integrity and investor protection:
Only selected indices would support vanilla options
Pricing will reference NAV via secure TWAP and slippage-aware models
Strike prices and maturities will be standardized and capped
This ensures consistent execution, robust valuation, and a strong foundation for future option layers.
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