Clearing V1
FAQ
Common questions about the clearing core, how options are backed, exercised, settled, and made whole when a cover fails. Each answer links to the page that covers it in full.
Writing and the bond
What backs an option I write?
Two things: a self-liquidating perp cover on Hyperliquid, and the option bond, a refundable collateral floor. The cover pays the option’s intrinsic if it lands in the money; the bond is the security the auction draws on if the cover is force-closed. See Writing Options and Option Bond.
Is the bond the same as the premium?
No. The bond is a refundable floor posted to the core; the premium is what the option actually trades for, on a venue, and never touches the core. The two are decoupled. See Option Bond.
Do I have to fund the bond in cash?
No. Because the long is a plain asset, you can bring your own perp and finance the bond from selling the long in the same transaction, posting only the gap between the bond and what the long fetches. See Writing Options.
Exercise and expiry
Can I always exercise an in-the-money option?
Up to expiry, and only against shorts that are still validly covered. A short that has been force-closed or is in a resolution auction cannot be assigned, so if that is your counterparty you are made whole through the auction instead of by exercise. See Exercise & Settlement.
What happens to an in-the-money option I do not exercise before expiry?
Expiry is a hard cutoff. An unexercised option is forfeited even if it is in the money; after expiry the position settles and the bond refunds to the writer. Exercise before expiry to capture the intrinsic.
Force-close and insurance
What happens when my cover is liquidated?
HyperCore force-closes the perp, which happens on the move that puts your option out of the money, and the short goes to the recollateralization auction. A force-closed writer forfeits the bond. See Liquidations.
What if the auction cannot clear?
Insurance steps in, but not as a passive pool that covers a gap. It is an external protocol that bids the auction like any trader, at max budget only, taking the short on by perp- or spread-novation and absorbing the shortfall from its own reserves, so the long holder keeps a backed option. See Insurance.
Spreads
Are spreads backed by a perp?
No. Spreads are cash-secured only, a spread cannot be backed by a perp. Its loss is capped at the width between the two strikes, so it locks that width in collateral. See Spreads.
What is the difference between a credit and a debit spread?
A credit spread takes in net premium and locks the width as collateral; a debit spread pays net premium up front and locks nothing (the premium is its max loss). Only credit spreads lock width.
Fees and admin
What are the fees, and what are they charged on?
A mint fee on the option bond, added on top of it, and an exercise fee on the intrinsic a holder collects, their profit. Each has a protocol cap. See Fees.
Can fees change after I write?
No. Fees are set per market when the ticker is listed and frozen for its life. Neither the fees nor a listed ticker’s other economics can change under an option already open.
What can the admin do to a live ticker?
Two things, and both reach new mints only: halt new mints, and shift the smile going forward. Everything else, the fees, strike, expiry, collateral, and discount, is frozen, and no admin action can touch an option already open. See Admin.
The core
Is there a separate contract for each option or ticker?
No. One clearing core serves the whole protocol; a ticker is a pair of token ids inside it, not a deployment. Only a per-writer Trader.sol and the external insurance protocol sit outside the core. See Architecture.
What is everything settled in?
The ticker’s collateral token, the Hyperliquid margin stablecoin. Options are cash-settled: the intrinsic is paid in that token, not by delivering the underlying.