Options Architecture

1. Options Onboarding

Purpose:

This process describes how a user initiates the creation of an option contract on the blockchain and gets an associated agent.

Flow:

1. Request for creation of options contract: User 1 sends a request to the Blockchain ( Options Factory Contract) to create a new options contract.

2. Creation of an options contract: The Options Factory processes User 1's request and creates a Options contract.

3. Creation notification to the user: Once the Options contract is created, a notification is generated and sent back to User 1, confirming the successful creation of the option.

4. Notification to the agent about the creation of options: Concurrently, the system notifies your Agent about the creation of the Options Contract. This notification reaches a designated Agent that will be responsible for managing this option on behalf of User 1.

5. Lock funds and create an option: Finally, User 1 locks the necessary underlying assets or collateral funds into the newly created Options contract. This action fully activates the option and makes it ready for trading.

   
   

2. Direct Bidding

Purpose:

This process illustrates how a user directly places a bid on an existing option contract without the explicit involvement of a strategy at the point of bid initiation.

Flow:

1. Funds locked by the user to bid option: User 2 decides to place a bid on an option. To do so, User 2 locks the necessary funds (the bid amount) and specifies the particular option contract they are bidding on.

2. Funds transfer; bid creation: The locked funds from User 2 are transferred to the relevant Option contract. This transfer simultaneously creates the bid within the contract, making it a formal offer.

3. Agent notified: Agent 2 is notified about the new bid. This notification allows the agent to monitor the state of the option and its bids.

   
   

3. Strategic Bidding

Purpose:

This process outlines how a user places a bid with the assistance of a strategy, which leverages market knowledge or algorithms to optimize the bidding process.

Flow:

1. Funds locked by the user to bid: User 2 first locks the funds they intend to use for bidding. These funds are held, ready for a bid, but the bid itself hasn't been formed yet.

2. Opportunity knowledge: Agent 2 receives "Opportunity knowledge" from a Strategy. This implies that the strategy identifies potential bidding opportunities (e.g., favorable market conditions, undervalued options).

3. Bid knowledge: Agent 2 also obtains "Bid knowledge" from the Agent Network. This could involve information about other bids, market liquidity, or counterparty preferences that influence the optimal bid.

4. Request creation of bid: Based on the "Opportunity knowledge" and "Bid knowledge," Agent 2 formulates an optimal bid and requests the creation of this bid on behalf of User 2.

5. Funds transfer; bid creation: The funds previously locked by User 2 are transferred, and the bid is formally created between Option contracts.

   
   

4. Direct Realization

Purpose:

This process details how a user directly exercises or realizes an option contract, leading to the release of underlying funds.

Flow:

1. Ask for realization: User 1, who holds the option, directly initiates a request to exercise or realize the option.

2. Funds Released: Upon validation of the realization request, the funds held within Option contract 2 are released and transferred to Option contract 1.

   
   

5. Strategic Realization

Purpose:

This process explains how a user exercises an option contract with the strategic guidance of an agent, potentially optimizing the timing or method of realization.

Flow:

1. Realization knowledge: Agent 2 receives "Realization knowledge" from a Strategy. This knowledge could include optimal times to realize an option based on market conditions, implied volatility, or specific profit targets.

2. Ask for realization: Based on this strategic knowledge, Agent 2 sends a request to Options Contract 1 to realize the option. This action is similar to direct realization but is informed by the strategy, making it autonomous.

3. Funds Released: After the realization request is processed and validated, the funds held within Option contract 1 are released and transferred to User 2.