Option Contract

An option contract is a legal agreement that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price within a specific timeframe. It is a derivative instrument whose value is derived from the underlying asset.

In the crypto space, these are typically executed via smart contracts, which enforce the terms without intermediaries. The contract details include the asset, strike price, expiration date, and the type of option.

Buyers pay a premium for this flexibility, while sellers assume the risk of the contract. These contracts are used for hedging, speculation, and income generation.

They are standardized to facilitate trading on various platforms.