Editing Financial derivatives (section)

== CALL-PUT options ==
In a CALL-PUT option there are two parties, called the CALL buyer and the PUT buyer, who both buy into the contract by encumbering value. The CALL-PUT smart contract design is given by the following basic flow:
# The CALL buyer encumbers <math>$P_0</math> cash in the contract.
# The PUT buyer encumbers a BOND in the contract. 
# The CALL-PUT smart contract initates if both encumbrances have been executed by time <math>t=0</math> , and matures at time <math>t=T</math>.
# At maturity time <math>T</math>, the CALL-PUT smart contract swaps the BOND and the cash. I.e., the BOND token is given to the CALL buyer. The <math>$P_0</math> cash is given to the PUT buyer.
If the price of a BOND has increased <math>$B_T>$P_0</math> at time <math>T</math>, then the CALL buyer profits. If the price has decreased <math>$B_T<$B_0</math>, the PUT buyer profits. In order to entice a CALL buyer to participate, the price of an actual BOND token <math>$B_0</math> should be larger than than <math>$P_0</math> or else the CALL buyer should just buy a BOND token at market. Thus <math>$B_0-$P_0</math> is related to the premium from a traditional put option which the PUT buyer pays to entice the CALL buyer to participate.