Risk Disclosure

You can lose your entire premium, and as a writer you can lose your entire locked collateral. Only trade with funds you can afford to lose completely.

Market risk

An option can expire worthless. If you buy an option and it finishes out of the money, you lose 100% of the premium you paid. If you write an option and the market moves against you, your locked collateral is used to pay the buyer, up to the full amount.

Leverage

Options are leveraged: small moves in the underlying can cause large percentage changes in the option's value. This magnifies both gains and losses.

Smart-contract risk

Volar is experimental software. Despite testing, smart contracts can contain bugs that lead to loss of funds. Interacting with the protocol means accepting this risk.

Oracle risk

Settlement depends on external price and volatility oracles. Although Volar's adapter fails closed against stale or manipulated data, no oracle is perfect. Incorrect or unavailable oracle data can affect pricing and settlement.

Pricing-model risk

On-chain Monte-Carlo pricing is an approximation. The convergence guard bounds but does not eliminate statistical error, and any model relies on assumptions (such as the input volatility) that may not hold in a real market.

Liquidity and capital lock-up

There are no liquidations, but writing an option locks your collateral until the option settles or is cancelled while still unfilled. You may not be able to exit a position early.

Regulatory risk

The legal status of on-chain options varies by jurisdiction and may change. You are responsible for determining whether your use of Volar is lawful where you live.

Not advice

Nothing on Volar is financial advice. Do your own research and consider seeking independent professional guidance before trading.