> For the complete documentation index, see [llms.txt](https://docs.dreamos.app/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.dreamos.app/introduction/key-concepts.md). # Key Concepts Understanding a few key terms will help you navigate options trading on Dream. ### Options Basics | Term | Definition | | -------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Call Option | An option that generally benefits from an increase in the underlying asset's price. | | Put Option | An option that generally benefits from a decrease in the underlying asset's price. | | Strike Price (Price Level) | The price used to determine an option's intrinsic value at expiration. | | Expiration | The date and time an options contract expires and is settled. | | Premium | The amount or cost paid to purchase an options contract | | Intrinsic Value | The amount an option would have if it expired right now, based on the difference between the underlying asset's current price and its strike price. | | In the Money (ITM) | An option with intrinsic value. Calls are ITM when the asset's price is above the strike; puts are ITM when it's below. | | At the Money (ATM) | An option whose strike price is equal to or approximately equal to the underlying asset's current price. | | Out of the Money (OTM) | An option with no intrinsic value. Calls are OTM when the asset's price is below the strike; puts are OTM when it's above. | | Breakeven | The settlement price at which the option payout equals the total cost paid to open the position. For a long call, strike + total cost per unit; for a long put, strike − total cost per unit. | ### Pricing and Execution | Term | Definition | | ---------- | ------------------------------------------------------------------------------------------------------------ | | Bid | The price a buyer is willing to pay for an option. | | Ask | The price a seller is willing to accept for an option. | | Spread | The difference between the bid and ask. | | Mark Price | The midpoint between the bid and ask prices. | | RFQ | Request for Quote. A process where Dream requests executable pricing from institutional liquidity providers. | | Quote | A time-sensitive price offered for a specific contract and trade size. | ### Balances and Performance | Term | Definition | | --------------- | ----------------------------------------------------------------------------------- | | Cash | Funds held in your onchain wallet. | | Buying Power | Funds available for options trading. | | Cost Basis | The amount used to calculate your position's return, including Dream's opening fee. | | Unrealized P\&L | The displayed profit or loss on an open position. | | Realized P\&L | The actual profit or loss after closing or settling a position. | | Settlement | The process of determining and paying an option's value at expiration. | --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation by asking a question. Perform an HTTP GET request on the following URL with the `ask` and `goal` query parameters: ``` GET https://docs.dreamos.app/introduction/key-concepts.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is what the user is ultimately trying to achieve, the reason they need the answer. Sharing it helps GitBook give you a better, more relevant answer. A goal is most helpful when it describes the outcome the user wants rather than restating the question. For example, with `ask=how do I create an API token`, a goal like `automate deployments from our CI pipeline` lets GitBook tailor the answer to that use case. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.