A call option gives its buyer the right to buy an underlying asset at a specified strike price under the contract’s exercise rules. Cash-settled calls provide the equivalent contractual payment instead of delivery. The buyer pays a premium; the seller assumes the corresponding obligation.
An expiry example
Consider a hypothetical cash-settled call covering one token, with a strike of 100 USDT and a premium of 5 USDT. If its expiry reference price is 120 USDT, the payoff is 20 USDT and the buyer’s profit is 15 USDT before fees. At 100 USDT or below, the payoff is zero and the buyer loses the premium.
For this simplified contract, expiry breakeven is 105 USDT. Different settlement currencies or multipliers require different calculations.
Before expiry and on the seller’s side
A call’s market price also depends on remaining time and implied volatility, so an underlying price rise alone does not guarantee a profitable sale. Exercise timing and automatic settlement vary by product.
An uncovered call seller can face theoretically unlimited losses. Holding the underlying against the call changes the combined payoff and caps its upside.