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Convallax options are European cash-settled derivatives on the YES outcome price of a Polymarket binary market. Each option gives the holder exposure to whether a market’s implied probability finishes above (call) or below (put) a chosen strike price at expiry.

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The Underlying

The underlying asset is the YES token price of a Polymarket binary market, denoted S. This price represents the market’s implied probability of the event occurring:
  • S = 0 means the market prices the event at 0% probability (NO wins)
  • S = 1 means the market prices the event at 100% probability (YES wins)
  • S = 0.65 means the market prices the event at 65% probability
Convallax options settle against this price at expiry, either as a binary outcome (0 or 100) or as a continuous VWAP price.

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Calls and Puts

TypeYou profit when…Payoff at expiry
CallYES finishes above strike Kmax(0, S − K)
PutYES finishes below strike Kmax(0, K − S)
A call option at strike K = 50¢ pays out if the YES price finishes above 50¢ at expiry.
  • If YES resolves at 80¢ → payoff = 30¢ per option (0.80 − 0.50)
  • If YES resolves at 50¢ or below → payoff = 0 (option expires worthless)
  • If YES wins outright (S = $1.00) → payoff = 50¢ per option (maximum)
Use case: You believe a prediction market outcome is more likely than the current price implies.

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Strikes

Strikes are quoted in cents and available in 5¢ increments from 5¢ to 95¢: 
5¢, 10¢, 15¢, 20¢, 25¢, 30¢, ... , 85¢, 90¢, 95¢
On-chain, strikes are stored as **basis points of 1∗∗(‘strikeBps‘),where50bps=1** (`strikeBps`), where 50 bps = 0.50. The full strike grid gives traders granular control over their risk/reward profile.

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Long vs Short

PositionActionRiskReward
Long (buyer)Pay premium upfrontLimited to premium paidUp to max payoff minus premium
Short (writer)Receive premium, post collateralUp to max payoff minus premium receivedLimited to premium received
  • Buying options gives leveraged exposure with capped downside — you can never lose more than the premium.
  • Writing (selling) options earns premium income but requires posting USDC collateral to cover the worst-case payout.

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Option Tokens (ERC-1155)

Each option series is represented as an ERC-1155 token on Polygon with 6 decimal places (matching USDC precision). The token ID equals the series ID, which is derived deterministically: 
seriesId = keccak256(conditionId, yesClobTokenId, strikeBps, expiry, optionType)
ParameterDescription
conditionIdPolymarket market condition ID (bytes32)
yesClobTokenIdPolymarket YES CLOB token ID (uint256)
strikeBpsStrike price in basis points of 1(e.g.50=1 (e.g. 50 = 0.50)
expiryUnix timestamp of option expiry
optionType0 = Call, 1 = Put
Only the ConvallaxCore contract can mint and burn option tokens. Tokens are freely transferable via standard ERC-1155 transfers.

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Collateral

Writers must deposit USDC collateral equal to the maximum possible holder payout for the options they mint:
TypeCollateral per option
Call(1 − K) in USDC — the max call payoff if S = $1.00
PutK in USDC — the max put payoff if S = $0.00
  • Strike: 50¢ (strikeBps = 50)
  • Max call payoff: 1.00−1.00 − 0.50 = $0.50 per option
  • Collateral required: 10 × $0.50 = 5.00 USDC
The writer deposits 5 USDC into ConvallaxCore and receives 10 call option tokens (ERC-1155).
  • Strike: 60¢ (strikeBps = 60)
  • Max put payoff: 0.60peroption(ifS=0.60 per option (if S = 0.00)
  • Collateral required: 5 × $0.60 = 3.00 USDC
The writer deposits 3 USDC and receives 5 put option tokens.

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Premium Bounds

The premium (price) of an option is bounded by the maximum payoff:
  • Call premium must be ≤ 1 − K (the max call payoff)
  • Put premium must be ≤ K (the max put payoff)
This ensures no-arbitrage: you never pay more for an option than the most it could ever pay out.

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Units and Decimals

QuantityDecimalsExample
USDC61,000,000 raw = 1.00 USDC
Option tokens61,000,000 raw = 1 whole option
Strike / resolutionbasis points of $150 = $0.50