BIOPset
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Risks
The risks of interacting with BIOPset.
Trading binary options is risky and not all binary options carry the same risk. If you are the liquidity provider (or writer) you face different risks to the binary option holder (or trader) and the binary option settler (or settler).

Stakeholder Risks

Be certain to thoroughly understand the fundamentals of trading options before attempting to use BIOPset. However, it is also important to understand the protocol's unique risks for the four stakeholders.

Traders

Buying binary options on BIOPset is the riskiest type of interaction with the protocol. Traders must pay a premium to acquire the binary option and choose whether to hold a call binary option or a put binary option.
Calls (call binary options) embrace a bullish outlook/strategy where a trader believes that the price of the asset price will appreciate in the future. However, traders will lose their entire premium if the asset price depreciates.
Puts (put binary options) embrace a bearish outlook/strategy where a trader believes that the price of the asset price will depreciate in the future. However, traders will lose their entire premium if the asset price appreciates.

Writers

Selling binary options on BIOPset is not a risk-free interaction with the protocol. It is not like interacting with a decentralized lending protocol that offers a variable or fixed interest rate. Binary options sellers can lose the capital that they put at risk. Writers are the counterparties to traders and can lose their entire investment if traders consistently meet with successful outcomes.

Settlers

Settling binary options on BIOPset is a risk-free interaction. Although gas prices will vary and need to be considered, settlers will always know the payout that is the result of settling any binary option prior to initiating the settlement operation.

Governing

Governing involves holding or staking BIOP tokens. This is not risk-free. The price of BIOP will go up or down depending on supply and demand.
In summary, if research points to increasing asset prices (and before the oracle update is received), then buy a call. Otherwise, buy a put. If the research points to the price staying about the same, be a writer. If you want zero risks, settle options. If you like the protocol, don't mind potential BIOP price fluctuation, and want to help govern the Settlement DAO, buy BIOP.
Last modified 3mo ago