Premium, tenor and expiry

Premium

The premium is the price of protection. You pay it once, when you buy, together with a platform fee. You never pay anything more, whatever the rate does.

The premium is set by the protocol's pricing engine and the pool's markup. See Premium calculation.

Tenor

The tenor is the length of the contract, in days. Each pool offers a set of tenors, for example 7, 14, 30 and 45 days, each with its own price. Tenors range from 1 to 365 days.

Choose the tenor that ends when your payment is due. Longer tenors cost more, because the rate has more time to move.

Expiry

The expiry is the moment the contract ends: the time you bought it plus the tenor. Only the exchange rate at expiry decides the payout. This is called European-style settlement.

A move past your strike during the contract does not pay if the rate comes back before expiry. A move that happens only in the last days does pay.

Shortly after expiry the contract settles, and any payout becomes available to you. See Expiry and settlement.