Hook is an NFT-native call options protocol.

Hook Protocol allows anyone to create, buy, and sell options on ERC-721 assets. ERC-721s (i.e. NFTs) on the Hook protocol only contain unique artistic images and do not contain, reference, represent the price, rate or level of any security, commodity or financial instrument.

Hook Protocol's call options are covered European call options with a hybrid cash-physical settlement.

  • Option Instrument: The option instrument itself is represented with another ERC-721 token. This token may be sold on any marketplace that supports ERC-721 tokens, including the marketplace Hook hosts specifically to trade these option assets.
  • Unit of Trade: Each option is backed by one specific underlying ERC-721 token, held in the protocol during the option period.
  • Strike Price Intervals: Any strike price is accepted by the protocol; however, Hook's frontends and orderbooks may not accept arbitrary strike prices for listed options.
  • Settlement: Hook's protocol settles the options by auctioning off the underlying ERC-721 asset starting one day before the option expiration (in most markets). If a bidder bids more than the strike price in the settlement auction, the asset is sold. The option writer receives the strike price, and the holder of the option receives the difference between the high bid and the strike price. The settlement is similar to a physical settlement from the perspective of the option writer and similar to a cash settlement from the option holder's perspective. The option holder can achieve physical settlement by simply bidding in the settlement option and receiving a refund for any bid amount above the strike price after the option.
  • Expiration Dates: Options can expire at any time; however, Hook's frontends and order books my not accept arbitrary strike prices for listed options.