Liquidity Pool
Understand how AMM-style liquidity works for onchain options with Options Liquidity Pool (OLP), and how liquidity providers earn yield from options trading.
Options Liquidity Mechanics
Options liquidity on CallPut is provided through pooled capital by Options Liquidity Pool(OLP), rather than fragmented orderbooks.
Liquidity is not assigned to individual strike–expiry pairs. Instead, it is shared across a pool, allowing the protocol to support a broad range of option specifications without spreading liquidity too thin. This structure avoids the fragmentation issues commonly seen in orderbook-based options markets.
Options Liquidity Pool Structure
The Options Liquidity Pool (OLP) is the core liquidity primitive of CallPut.
Liquidity providers deposit assets into OLPs, which act as the counterparty to traders’ option positions. Whenever a trader opens or closes a position, the OLP assumes the opposite exposure in a fully collateralized manner.
This design ensures consistent execution while maintaining clear and bounded risk for liquidity providers.
Effects of AMM-Style Liquidity
CallPut uses a proprietary AMM model purpose-built for options, enabling accurate and immediate pricing based on model-derived prices rather than matching individual counterparties.
Because pricing is driven by the AMM, the protocol can accurately reflect the high price sensitivity of options. This allows trades to be executed with lower cost and tighter spreads, even under volatile conditions.
This structure also:
Enables continuous liquidity for both opening and closing positions
Allows in-the-money positions to be closed during thin market conditions
Reduces reliance on designated market makers
Risk Management for Liquidity Providers
CallPut’s proprietary AMM incorporates dynamic spread adjustment based on real-time risk conditions within the OLP.
When the OLP’s Greeks exposure increases, spreads widen to compensate liquidity providers and discourage trades that increase risk. Conversely, trades that reduce overall risk exposure are offered narrower spreads as an incentive.
This pricing-based risk management mechanism helps maintain long-term pool stability while keeping markets open and functional.
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