Glossary
Key terms and definitions for the Milopt Protocol.
Option Terms
American-Style Option
An option that can be exercised at any time before expiration. Milopt uses American-style options, giving buyers maximum flexibility.
European-Style Option
An option that can only be exercised at expiration. Not used in Milopt.
CALL Option
The right to buy an asset at a predetermined strike price. Profitable when the asset price rises above the strike.
PUT Option
The right to sell an asset at a predetermined strike price. Profitable when the asset price falls below the strike.
Exercise
The act of using an option to buy (CALL) or sell (PUT) the underlying asset at the strike price.
Expiry / Expiration
The date and time when an option contract becomes invalid. In Milopt, stored as Solana slot numbers.
Premium
The upfront cost paid by the buyer to purchase an option. This goes to the market maker as compensation for providing the option.
Strike Price
The predetermined price at which the underlying asset can be bought (CALL) or sold (PUT).
Underlying Asset
The asset that the option gives the right to buy or sell. In Milopt: SOL, WBTC, etc.
Option States
In-the-Money (ITM)
An option that would be profitable to exercise right now.
CALL: Current price > Strike price
PUT: Current price < Strike price
At-the-Money (ATM)
An option where the current price equals the strike price. Exercising would break even (minus premium).
Out-of-the-Money (OTM)
An option that would not be profitable to exercise right now.
CALL: Current price < Strike price
PUT: Current price > Strike price
Market Participants
Buyer
A trader who purchases an option by paying a premium. Has the right (but not obligation) to exercise before expiry.
Seller / Market Maker
A liquidity provider who creates signed quotes and deposits collateral. Earns premiums in exchange for taking on price risk.
Protocol-Specific Terms
Attestation Keypair
An Ed25519 keypair used by market makers to cryptographically sign quotes. Separate from their wallet keypair for security.
Bounded Replay Protection (BRP)
A nonce system that prevents quote replay attacks. Each market maker has 2,000 unique slots that increment after use.
Collateral
Assets deposited by market makers to back their options. Locked when an option is created, released when exercised or expired.
Option Contract
An on-chain account representing a single option. Stores strike, expiry, premium, buyer, seller, and exercise status.
Option Type
A protocol-level definition of an asset pair (e.g., SOL-CALL, WBTC-PUT). Created by admins.
PDA (Program Derived Address)
A deterministic account address controlled by the smart contract. Used for vaults, option contracts, and indexes.
Quote
A signed message from a market maker containing the premium, strike, expiry, and other parameters. Must be cryptographically verified on-chain.
RFQ (Request for Quote)
A message sent by a buyer requesting option quotes from market makers. Contains desired asset, direction, strike, amount, and expiry.
Seller Vault
An on-chain account where market makers deposit collateral (SOL, WBTC, USDC). Tracks available and locked amounts.
Solana Terms
Lamport
The smallest unit of SOL. 1 SOL = 1,000,000,000 lamports (9 decimals).
Slot
Solana's unit of time. Each slot is approximately 400 milliseconds. Used to measure option expiry.
SPL Token
Solana Program Library token standard. WBTC and USDC are SPL tokens.
Transaction
An atomic operation on Solana. Creating or exercising an option requires a transaction signed by the buyer's wallet.
Pricing Terms
Basis Point (BPS)
1/100th of a percent. 100 bps = 1%. Used for protocol fees.
Decimal Places
Number of digits after the decimal point:
SOL: 9 decimals (1 SOL = 1,000,000,000 lamports)
WBTC: 8 decimals (1 WBTC = 100,000,000 satoshis)
USDC: 6 decimals (1 USDC = 1,000,000 micro-dollars)
Intrinsic Value
The immediate profit if an option were exercised now:
CALL: max(Current Price - Strike, 0)
PUT: max(Strike - Current Price, 0)
Time Value
The portion of an option's premium beyond intrinsic value. Decreases as expiry approaches.
Settlement Terms
Settlement
The process of transferring assets when an option is exercised:
CALL: Buyer pays strike, receives base asset
PUT: Buyer pays base asset, receives strike
Collateral Lock
When an option is created, collateral transfers from the seller's vault to the option contract. The seller cannot withdraw it until exercise or expiry.
Collateral Release
When an option expires without being exercised, locked collateral returns to the seller's vault.
Security Terms
Ed25519
A cryptographic signature algorithm used to verify quotes are authentic. Market makers sign quotes off-chain; the contract verifies on-chain.
Nonce
A unique number used once. In Milopt, BRP slots act as nonces to prevent quote replay.
Replay Attack
A malicious attempt to reuse an old signed quote. Milopt prevents this with BRP.
Quote Expiry
Quotes are only valid for ~40 seconds (100 slots) to prevent stale pricing. Buyers must create options quickly after receiving quotes.
Time Conversions
1 second
2.5 slots
-
1 minute
150 slots
-
1 hour
9,000 slots
-
1 day
216,000 slots
-
7 days
1,512,000 slots
-
30 days
6,480,000 slots
-
Common Abbreviations
ATM
At-the-Money
BPS
Basis Points
BRP
Bounded Replay Protection
ITM
In-the-Money
MM
Market Maker
OTM
Out-of-the-Money
PDA
Program Derived Address
RFQ
Request for Quote
SOL
Solana (native token)
SPL
Solana Program Library
USDC
USD Coin (stablecoin)
WBTC
Wrapped Bitcoin
Learn More
Protocol Overview - Understanding the Milopt Protocol
How It Works - Complete option creation and exercise flow
Option Types - CALL vs PUT detailed comparison
Smart Contracts - Technical architecture
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