Options in five minutes

Here's one week on Plume. By the end of it, you'll know everything the rest of these docs build on.

Maria has ten NVDA tokens

Maria bought ten tokenized NVDA a while back. She's not planning to sell — she likes the position. But sitting in her wallet, those tokens aren't doing anything.

NVDA is trading at $150. Maria opens Plume, picks Earn, and locks her ten tokens. The app suggests a strike of $160 — a bit above where NVDA sits now — and a premium of $0.77 per token. She confirms. Her offer goes live: ten NVDA calls, strike $160, expiring Friday, $7.70 total.

That $7.70 is called a premium. It's the price of the option — what a buyer pays for the right Maria is selling.

Dev thinks NVDA is about to move

Dev doesn't own any NVDA, but he thinks it's going higher this week. Buying ten actual NVDA tokens would cost $1,500 — more cash than his conviction warrants. Instead, Dev buys Maria's offer. Eight dollars, and he now owns ten calls: the right to collect NVDA's gain above $160, for as long as this series is alive.

This is the entire trade. Maria is the writer — she locked collateral and sold the upside above a price. Dev is the buyer — he paid a small amount for a shot at a big move. The strike is $160, the line in the sand. Friday is the expiry, the date this series resolves if nobody's acted by then.

Wednesday, NVDA jumps to $200

Dev was right. His calls are worth real money now — and here's the part that surprises people coming from traditional options: he doesn't have to wait for Friday.

Dev opens his position and hits Exercise. Instantly, at the live price, he collects the gain above his strike: $200 minus $160, worth 0.2 of an NVDA token for every option he holds. Ten options, two tokens, landed in his wallet in the time it takes to confirm a transaction. No buyer needed. No market required. Just the oracle price and the math.

He could also have sold the option instead — on Plume, an option is a token, and tokens can trade. Selling usually nets a touch more than exercising, because it captures the time still left on the clock. Exercising is the guaranteed floor; selling is the occasional bonus, when a market for it exists.

Maria, on the other side, is assigned: 0.2 of a token per exercised option comes out of what she locked. She keeps the $7.70 premium regardless — that was hers the moment Dev paid it. What's left of her ten tokens, she keeps too.

What if NVDA hadn't moved?

Say it's Friday and NVDA is sitting at $145 — below Maria's $160 strike. Nobody exercised, because there was nothing worth exercising. The series expires automatically at the settlement price. Dev's calls are worthless — he's out the $7.70 he paid, which was always the most he could lose. Maria gets all ten tokens back, plus she still has the $7.70. She earned a week of yield for tokens that were otherwise just sitting there.

That's the trade, both ways it can go. Nobody owes anything they didn't already lock. Nobody gets margin-called. The most Dev can ever lose is what he paid; the most Maria ever gives up is the upside above her strike, for one week, on tokens she chose to make available.

Everything else is a variation of this week

Puts instead of calls. Different strikes, different assets, different timing. A trader who exercises Monday instead of Wednesday. A writer who buys their own option back early to get their collateral back sooner. Every one of those is the same five ideas — lock, write, buy, exercise-or-expire, settle — arranged a little differently.

And every day between now and expiry is a day you can act. Not just the last one.