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optionsexchange-buy-and-sell-otokens.md

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OptionsExchange: Buy and Sell Options

Introduction

The oTokens minted can be bought and sold through the OptionsExchange contract.

State Changing Functions

Buy oTokens

oTokens can be bought by calling the buy function. Before buying, you need to approve the OptionsExchange contract to spend your money. oTokens can be bought and sold on an exchange like Uniswap at anytime before expiry.

The buyOTokens function is payable because it needs to be able to receive ETH as a paymentToken.

function buyOTokens(address payable receiver, address oTokenAddress, address paymentTokenAddress, uint256 oTokensToBuy) payable

receiver : The account that will receive the oTokens. The receiver needs to be payable because if the holder of the oToken calls exercise, then the claim payout may be in ETH.

oTokenAddress : The address of the oToken that is being bought

paymentTokenAddress : The address of the token you are paying for oTokens with. If it is set to address(0), it means ETH. Ensure that the msg.sender has sufficient paymentTokens before calling this function.

oTokensToBuy : The number of oTokens to buy. See oTokenExchangeRate for amount of underlying protected by 1 oToken.

msg.sender : The account that is paying the premiums.

msg.value (optional) : If the payment token is ETH, then the msg.value is the amount of ETH paid, else it is 0.

{% tabs %} {% tab title="Solidity" %}

OptionsExchange optionsExchange = OptionsExchange(0x6B3...);

/**
 * Need to approve any ERC20 before spending it. 
 * If paying in ETH, comment out line 7.
 */
paymentToken.approve(address(optionsExchange), 1000000000);

/**
 * receiver is the msg.sender
 * oTokenAddress is the oDai rinkeby address
 * paymentToken is an ERC20
 * 100 oDai protects 100 * 10^-14 Dai i.e. 10^-12 Dai. 
 * msg.sender is set automatically in solidity. 
 */
optionsExchange.buyOTokens(msg.sender, 0x3BF..., address(paymentToken), 100);

{% endtab %}

{% tab title="Web3 1.0" %}

const optionsExchange = OptionsExchange.at(0x6B3...);

/**
 * Need to approve any ERC20 before spending it.
 * If paying in ETH, comment out lines 7 - 10.
 */
await paymentToken.methods.approve(
    optionsExchange.options.address,
    '1000000000000000000000000000000'
    ).send({
     // set the msg.sender
     from: myAccount
     });

/**
 * receiver is myAccount
 * oTokenAddress is the oToken contract's address
 * paymentToken is an ERC20
 * 100 oDai protects 100 * 10^-14 Dai i.e. 10^-12 Dai. 
 */
await optionsExchange.methods.buyOTokens(
    myAccount, 
    oToken.options.address, 
    paymentToken.options.address, 
    '100').send({
    
     // set the msg.sender
     from: myAccount,
     
     // msg.value is 0 because paymentToken is ETH
     value: 0
     });

{% endtab %} {% endtabs %}

{% hint style="danger" %} Common Errors:

  1. Ensure that the msg.sender has approved sufficient amount before calling the buyOTokens function.
  2. Ensure the msg.sender has sufficient paymentToken balance to pay for the oTokens bought.
  3. The uniswap pool may not have sufficient liquidity. You can call getExchange on the oTokenAddress to then see if the exchange has sufficient liquidity. {% endhint %}

Sell oTokens

oTokens can be sold by calling the sell function. Premiums are received in any token of the seller's choice. oTokens can be sold at anytime before expiry on an Exchange like Uniswap.

function sellOTokens(address payable receiver, address oTokenAddress, address payoutTokenAddress, uint256 oTokensToSell)

receiver : The account that will receive the premiums

oTokenAddress : The address of the oToken that is being sold

payoutTokenAddress : The address of the token to receive premiums in. address(0) for ETH.

oTokensToSell : The number of oTokens sold. See oTokenExchangeRate for amount of underlying protected by 1 oToken.

msg.sender : The account that is supplying the oTokens to be sold.

{% tabs %} {% tab title="Solidity" %}

OptionsExchange optionsExchange = OptionsExchange(0x6B3...);
/**
 * Need to approve any ERC20 before spending it
 */
oToken.approve(address(optionsExchange), 1000000000);
optionsExchange.sellOTokens(0xFB4..., address(oToken), address(0), 100);

{% endtab %}

{% tab title="Web3 1.0" %}

const optionsExchange = OptionsExchange.at(0x6B3...);

/**
 * Need to approve any ERC20 before spending it
 */
await oToken.methods.approve(
    optionsExchange.options.address,
    '1000000000000000000000000000000'
    ).send();

await optionsExchange.methods.sellOTokens(
    myAccount, 
    oToken.options.address, 
    '0X0', 
    '100').send();

{% endtab %} {% endtabs %}

Read Only Functions

Calculate Premiums To Pay

This function calculates the premiums to be paid if a buyer wants to buy oTokens on Uniswap.

function premiumToPay(address oTokenAddress, address paymentTokenAddress, uint256 oTokensToBuy) view returns (uint256)

oTokenAddress : The address of the oToken that is being bought

paymentTokenAddress : The address of the token you are paying premiums in to buy the option tokens. If it is set to address(0), you can pay with ETH.

oTokensToBuy : The number of oTokens to buy. See oTokenExchangeRate for amount of underlying protected by 1 oToken.

RETURN : The amount of paymentToken to pay as premiums

{% tabs %} {% tab title="Solidity" %}

OptionsExchange optionsExchange = OptionsExchange(0x6B3...);

/** 
 * oTokenAddress is oToken contract's address
 * paymentTokenAddress is 0 because paying with ETH 
 * 100 oDai protects 100 * 10^-14 Dai i.e. 10^-12 Dai.
 */
uint256 ethToPay = optionsExchange.premiumToPay(0x3BF..., address(0), 100);

{% endtab %}

{% tab title="Web3 1.0" %}

const optionsExchange = OptionsExchange.at('0x6B3...');

/** 
 * oTokenAddress is oToken contract's address
 * paymentTokenAddress is 0 because paying with ETH 
 * 100 oDai protects 100 * 10^-14 Dai i.e. 10^-12 Dai.
 */
const ethToPay = optionsExchange.methods.premiumToPay('0x3BF...', '0x0', '100').call();

{% endtab %} {% endtabs %}

Calculate Premiums Received

This function calculates the amount of premiums that the seller will receive if they sold oTokens on Uniswap.

function premiumReceived(address oTokenAddress, address payoutTokenAddress, uint256 oTokensToSell) view returns (uint256)

oTokenAddress : The address of the oToken that is being sold

payoutTokenAddress : The address of the token to receive premiums in. address(0) for ETH.

oTokensToSell : The number of oTokens sold. See oTokenExchangeRate for amount of underlying protected by 1 oToken.

RETURN : The amount of payoutToken that the seller will receive

{% tabs %} {% tab title="Solidity" %}

OptionsExchange optionsExchange = OptionsExchange(0x6B3...);
uint256 ethReceived = optionsExchange.premiumReceived(0x3BF..., address(0), 100);

{% endtab %}

{% tab title="Web3 1.0" %}

const optionsExchange = OptionsExchange.at('0x6B3...');
const ethToPay = optionsExchange.methods.premiumReceived('0x3BF...', '0x0', '100').call();

{% endtab %} {% endtabs %}