> ## Documentation Index
> Fetch the complete documentation index at: https://docs.updown.fast/llms.txt
> Use this file to discover all available pages before exploring further.
# How options work
> updown's calls and puts on stock tokens: contracts, strikes, expiries, and how settlement pays.
Options on updown are **calls and puts on the biggest US stocks and ETFs**, priced and cash-settled against each stock's **token on Robinhood Chain**. You pay a premium up front, and at the close you are paid by how far the token finishes past your strike.
Options on updown are **real-money trading**. Losses are real, and the premium you pay is the most you can lose.
## Calls and puts
Each stock has two kinds of contract, named in the app by what you expect the price to do:
| Contract | In the app | Pays at the close |
| -------- | -------------------------------------- | ------------------------------------------------------------------------------- |
| **Call** | "Above \$X" under the **Up** outlook | (settlement price − strike) × contracts, if the token finishes above the strike |
| **Put** | "Below \$X" under the **Down** outlook | (strike − settlement price) × contracts, if the token finishes below the strike |
A contract that finishes on the wrong side of its strike pays \$0 and you lose the premium.
The **Volatile** outlook buys a call and a put together (a straddle or strangle), so you profit from a big move either way. The **Neutral** outlook, which would sell a strangle, is labelled **Coming soon**.
## Key terms
| Term | What it means |
| -------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **Contract** | One **stock token** on Robinhood Chain, roughly one share. Contracts can be fractional, to 0.01. This is not the 100-share multiplier of listed options. |
| **Premium** | The price you pay per contract, in dollars. Your maximum loss. |
| **Strike** | The price your contract is measured against. Six are offered per expiry, at 1%, 2%, and 3% above and below the current price. |
| **Break-even** | Where a bought contract has paid for itself: strike + premium for a call, strike − premium for a put. |
| **% chance** | updown's estimate that the contract finishes past its strike. |
| **Expiry** | The regular-session close the contract settles at. |
### The stock token
Each stock's token is backed by the company's or ETF's shares. One token is slightly more than one share, because dividends are reinvested into the token instead of paid out, so the "Shares per token" figure creeps up over time. The token trades around the clock in dollar pools on Robinhood Chain. **The price on the options page, and the price your options settle at, come from those pools**, so they can differ from the stock's exchange price.
## Worked example
> **SPY** is at $765.43. You buy **1 contract** of the "Above $770" call for a \*\*$4.92** premium. Your break-even is $774.92.
>
> * Settles at **$778.00** → you receive (778 − 770) × 1 = **$8.00**. Profit \$3.08.
> * Settles at \*\*$772.00** → you receive $2.00. Loss \$2.92.
> * Settles at \*\*$770.00 or below** → you receive $0. Loss \$4.92, the premium.
## Expiries and hours
* **Two expiries are offered at a time**: the next two regular-session closes that are more than 15 minutes away. During a session that is today's close and the next session's. After 3:45 PM ET, overnight, and at weekends, it is the next two sessions.
* Expiry is the **4:00 PM ET** close, or **1:00 PM ET** on NYSE half-days. NYSE holidays are skipped.
* **Trading stops 15 minutes before each expiry.** At 3:45 PM ET the same-day expiry disappears from the list and the chain rolls to the next close.
* **Options trade around the clock, every day.** Overnight and at weekends you are buying the next session's close.
Home labels same-day options "Options 0DTE · Expire in", with a countdown to the close.
## Settlement
Settlement is automatic and cash. There is no exercise button.
1. The **settlement price** is the average of the token's on-chain price over the **5 minutes before the close**. For regular tokens it is also checked to be within 0.5% of the real stock's last price. Thin tokens settle on the on-chain average alone.
2. In-the-money contracts are paid (settlement − strike) or (strike − settlement), times contracts, straight to your wallet in **USDG**. Out-of-the-money contracts expire worthless.
3. The settlement job runs every 5 minutes, so expect the payout within minutes of the close.
**Refunds.** If no final price can be established within 6 hours of expiry, the position is marked **void** and your premium is refunded. It shows in history as "Refund · no settlement price, premium refunded".
## How options differ from interval markets
| | Options | Interval markets |
| ----------------- | -------------------------------------- | ----------------------------------- |
| **What wins** | The token finishes past your strike | Up or Down on the window |
| **Payout** | Scales with the final price | Fixed \$1.00 per winning contract |
| **Price source** | The stock's on-chain token | A live price feed |
| **Expiry** | Today's or the next session's close | Every 5, 15, or 60 minutes |
| **Money on open** | Premium leaves your wallet immediately | Nothing moves; the cost is reserved |
## Selling back
You can sell any contract at its current **bid** at any time until 15 minutes before its expiry. See [Positions & settlement](/options/positions-and-settlement).