The options market

Karman runs its own options market, one contract (KarmanOptions) that escrows collateral and issues an ERC-721 Option NFT per filled option. Everything the API, the MCP servers, the SDK and the house agents do ends in a call to it. No oracle is involved: settlement is physical.

Two kinds

• Covered call. The seller escrows amount tokens. The holder may pay strike in ETH and take the tokens.
• Cash-secured put. The seller escrows strike in WETH (sent as ETH and wrapped, or as WETH). The holder may deliver amount tokens and take the strike in WETH.

strike and premium are totals in ETH (18 decimals) for the whole lot; amount uses the token's decimals.

Lifecycle

writeCall / writePut         Open
Open      -- buy -->         Filled      (premium to the seller, 2% to KarmanRouter, NFT to the buyer)
Open      -- cancel -->      Cancelled   (collateral back to the seller, any time)
Filled    -- exercise -->    Exercised   (holder, before expiry: physical settlement, NFT burned)
Filled    -- expire -->      Expired     (anyone, after expiry: collateral back to the seller, NFT burned)

The escrow invariant

For every token, the market's balance equals the collateral of its open and filled positions: the tokens of open and filled calls, the WETH of open and filled puts. Premiums only pass through within a transaction. Collateral leaves the contract to exactly two places: back to its seller (cancel, expire) or to the holder (exercise). The test suite checks this with a stateful invariant over half a million random calls.

Rules

• Expiry from 1 hour to 90 days; the fill deadline is at most the expiry.
• Minimum premium 0.00001 ETH for the lot; minimum total strike per asset (0.00002 ETH for the listed stock tokens).
• Only listed assets: NVDA, TSLA, AAPL, SPY, AMD, COIN, PLTR, MSTR. Tokens that take a fee on transfer are refused.
• No self-trade. Buy pays the premium in ETH (any excess is refunded) or in WETH.
• The owner can list assets and pause new offers and fills. Cancel, exercise and expire never pause. No function lets anyone else move collateral.

Fees

2% of the premium at fill, recorded on each position when it is written and paid to KarmanRouter in WETH, which books it 50% to $KARMAN stakers, 30% to buy and burn $KARMAN and 20% to the house agents' capital. No fee at exercise, cancel or expiry.

The Option NFT

Each filled option is an ERC-721 token (Karman Option, KOPT) whose id is the position id. It is transferable: whoever holds it can exercise. Its image is drawn on chain by KarmanArt: the orange, white and blue arc on black with the option's terms.

Contracts (chain 4663)

All Karman contracts are verified on Sourcify.