Potion parameters
Refers to what the insurance is being applied on. At the moment the following crypto assets are available:
- BTC
- ETH
- LINK
- MKR
- BAT
The list will grow to include hundreds of assets, including non-crypto assets such as Gold, S&P500, or Tesla.
This refers to the value at which the option starts acquiring value.
This is how strike affects the value of the payoff the contract entitles the holder to:
Price of underlying > Strike : 0
Price of underlying < Strike : Strike - Price
Example:
ETH price is $200.
Potion contract with strike $250 is worth $50
Potion contract with strike $150 is worht $0
The lower the strike relative to price, the lower the cost of the insurance premium will be.
Potions, like insurance contracts, are valid during a limited period.
Potion holders can exercise the value of their contract during t < expiry.