Optimum created a protocol that allows anyone to create and trade options on ETH, settled in DAI, as ERC20 tokens. The protocol is totally decentralized, no masternodes, no permissions, no fees.

How does it work?

Basically when an option is made, the underlying asset is put up as collateral (either ETH or DAI), so there is never any counterparty risk. This allows people to enter creative positions such as hedging risk or taking leverage long positions.

The protocol just went live on ForkDelta with the first order book being for a $200 strike PUT option that expires in January. https://forkdelta.app/#!/trade/0xbe2f541084d3a354976d2be5fb4f40d2ad80d161-ETH. This contract will be in-the-money if ETH price is less than $200 in January.

Oh yeah, one last thing: options automatically settle through a decentralized settlement auction, so token holders don’t need to think about exercising their contracts before they expire, it is handled automatically with no oracles or price feeds that risk manipulation.

No Liquidation!

The option position is open until it expires. Unlike other leverage and short selling mechanisms, there is no possibility that your tokens are liquidated due to short term price fluctuations.