Editing Synthetix (section)

= Options exchange =

Synthetix Exchange includes a feature to allow investors to trade options. In finance an option is an instrument that affords the right to buy or sell an asset in the future. You have the option to choose to take advantage of this right or not (hence to term ‘option.’)

In Synthetix Exchange options eventually expire and have a date by which they mature and can be used (or ignored if one wishes.) The way these options are implemented is much more akin to a traditional exchange as '''there is a clear counterparty to the position and a clear winner and loser.''' The difference is: multiple people can be on the same side. In which case – the losers funds are split between the winners.

That means the most important value to consider when trading binary options on Synthetix Exchange is the ratio of funds bet between the two sides. For example, if there is 90 sUSD on long and 10 sUSD on short – you’re going to make a lot more money if you go short and win than if you go long as there’s more profit to split. The second variable is obviously the amount of funds you put into a position!

Your profit is calculated by multiplying what you bet by the odds ratio of your position. '''We can say then that the options exchange is the safest part of the Synthetix project since positions are fully funded.''' However, it still relies on external oracles, a poorly designed stable coin, and likely an interface that contains race conditions for pricing these options.

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