Overview

Hook's call options do not use oracles, but instead, use a settlement auction to determine the final price of the underlying asset. 24 hours before an option's expiration, the NFT is automatically listed for sale on the option's page in Hook's UI. Arbitragers or NFT buyers can bid above the strike price on the underlying NFT.

Bids must be 50 basis points (0.50%) greater than the previous bid to be eligible.

At the option's expiration two situations can occur.

1. The underlying NFT received one or more bids above the strike price.
   The NFT is sold to the highest bidder. The option writer/NFT holder receives the strike price. The option holder receives the difference between the highest bid and the strike price.
2. The underlying NFT did not receive any bids above the strike price.
   The option expires worthless. The option writer can either withdraw the underlying NFT or earn on it again.