Glossary of Terms

Find below a glossary of the commonly used terminology used throughout Pods' material.

If we're missing any, please let us know on our Discord channel, and we'll add it to the list.

Term	Description
Underlying asset	The object asset of the contract, the asset on which the buyer wants to buy rights.
Strike price	The agreed price in which the buyer will be able to sell or buy the underlying asset to the seller at any moment until expiration.
Strike asset	The asset in which the strike price is fixed and the asset will execute the physical settlement.
Expiration date	The contract is valid until the expiration date.
Put	A put option describes the right to sell the underlying asset at the strike price.
Call	A call option describes the right to buy the underlying asset at the strike price.
Collateral asset	The collateral asset is the strike asset and has to be locked in the contract to mint PodOptions.
Premium	The premium is the option's price. It is the amount of DAI that the buyer has to pay for the seller to purchase an option.
PodOptions	It is our primitive. An ERC20 token that represents the option's contract rules.
PodPut	The token represents the buyer's right to sell the underlying asset at the strike price at any moment until expiration.
PodCall	The token represents the buyer's right to buy the underlying asset at the strike price at any moment until expiration.
Option Token	PodOptions are the Pods Protocol primitive. They can be either PodCalls or PodPuts.
AMM	Automated Market Maker.
Options AMM	Our options specific AMM.
Black Scholes	It is an options pricing formula widely used in traditional finance.
Liquidity Provider	It is the user that provides funds as liquidity to the AMM in exchange for trading fees.
Seller	It is the user that locks collateral in the contract and mint options tokens.
Buyer	It is the user that buys options from the AMM.
Implied Volatility	Implied Volatility is the market's forecast of a likely movement in the underlying asset spot price. In our model, the IV derives from the pool's activities and imbalance.
Time to expiration	Amount of time left to the option expiration date.
Impermanent loss	Potential loss a liquidity provider could get from providing liquidity to the AMM instead of holding the assets.
Impermanent gain	Potential gain a liquidity provider could have from providing liquidity to the AMM instead of holding the assets.