> For the complete documentation index, see [llms.txt](https://help.rails.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://help.rails.xyz/trading/options/options-metrics-guide.md). # Options Metrics Guide Learn how Rails calculates option premium, payoff, and margin. This guide explains the main options metrics on Rails and how they are calculated. {% hint style="info" %} See [Black-76 & the Greeks](/trading/options/black-76-and-the-greeks.md) for pricing inputs and [Margin & Liquidation](/trading/options/margin-and-liquidation.md) for liquidation mechanics. {% endhint %} ## Definitions

Symbol	Meaning
F	Forward price: the underlying reference price used to value the option. At Rails, we use Deribit's forward price feed.
K	Strike price: the fixed price that defines the option's payoff at expiry.
P	Price, where: P_{index} is the Index Price, or current fair-market price of the underlying asset. It is used in margin calculations. P_{call} is the call model price from Black-76, before the intrinsic floor. P_{put} is the put model price from Black-76, before the intrinsic floor. P_{mark} is the Mark Price. P_{settle} is the Settlement Price: the price of the underlying asset at 08:00 UTC on the expiry date.
Q	Contracts: the number of option contracts in the position.
S	Side: direction of the position, where: Long = 1 Short = -1
T	Time to expiry: the remaining life of the option, expressed in years.
p	Premium: the per-contract amount paid by the buyer or received by the seller. p_{paid} is the Premium Paid. p_{rcvd} is the Premium Received.
M	Margin, where: IM is Initial Margin, or collateral required to open a short option position. MM is Maintenance Margin, or the minimum collateral required to avoid liquidation on a short option position. M_{used} is Used Margin, or collateral locked to cover open orders and positions.
D	Deposits: Amount of USDT deposited into your account. Note: Transferring cash balances from Perps to Options Account are considered a deposit.
W	Withdrawals: Total USDT withdrawal volume. Note: Transferring cash balances from Options to Perps are considered a withdrawal.
P\&L	Profit & Loss: the USDT profit or loss relative to entry and position size, where: P\&L_u = Unrealized P&L P\&L_r = Realized P&L
Fee	Fees: Total fees charged in USDT, where: Fee_{del} is the Delivery Fee (only at expiry) Fee_{txn} is the Transaction Fee (except at expiry) Fee_{liq} is the Liquidation Fee Fee_{wd} is the Withdrawal Fee
PO	Payoff: the USDT amount settled at expiry, equal to the option's intrinsic value if in-the-money and zero otherwise. The seller pays the payoff to the buyer at settlement.

## Calculations ### General #### Total Balance Total Balance is the settled cash value of your account. It reflects completed events, but does not include unrealized P\&L from open positions: $$\text{Total Balance} = D\_{total} + p\_{total} + PO -W\_{total} -Fees\_{total}$$ #### Available Balance Available Balance is funds available for new orders. The amount you can withdraw may be lower. $$\text{Available Balance} = \text{Total Balance} - M\_{used}$$ #### Account Balance Your Account Balance is your total settled cash (collateral). It equals your Total Balance and does not change with mark prices. $$\text {Account Balance} = \text{Available Balance} + M\_{used}$$ #### Account Equity Account Equity is the real-time value of the account, combining settled cash with the current mark-to-market value of all open positions: $$\text{Account Equity} = \text{Total Balance} + \sum\_{i} \left( P\_{mark,i} \times Q\_i \times S\_{i} \right)$$ where: * $$\sum\_{i} \left( P\_{mark,i} \times Q\_i \times S\_i \right)$$ is the combined mark-to-market value of all open positions, using each position's Mark Price ($$P\_{mark,i}$$), quantity and Side * For short positions, the position mark value is negative, so Account Equity can be above or below Total Balance depending on how open positions are marked. ### Margin #### Margin Ratio Margin Ratio measures how close a short position account is to liquidation. It is the account's total maintenance requirement relative to its equity. $$\text{Margin Ratio} = \frac{MM\_{total}}{\text{Account Equity}}$$ where: * $$MM\_{total} = \sum\_{i} MM\_i$$ * Note: the sum of the Maintenance Margin for each open position ($$i$$) (see [Maintenance Margin (Short Call or Short Put)](#maintenance-margin-short-call-or-short-put)). * $$\text{Account Equity} = \text{Total Balance} + \text{Positions Mark Value}$$ A higher Margin Ratio indicates greater liquidation risk; liquidation is triggered when the ratio reaches 98%. #### Margin (Long Call/Put) For **long calls or puts**, the maximum loss is the premium paid. Rails adds a 16.5% buffer rate:\ \ Required initial margin is calculated: $$IM = (P\_{mark} \times 1.165) \times Q$$ Once the premium is paid upon fills, the maintenance margin required becomes: $$MM = (p \times 0.165) \times Q$$ {% hint style="info" %} The 16.5% **buffer rate** covers a 12.5% trading fee, 1% insurance fee, and 3% slippage. {% endhint %} #### Initial Margin (Short Call or Short Put) For **short calls or short puts**, potential losses can be large. Short calls have no upside loss ceiling, and short puts can still lose significantly if the underlying falls to zero. Therefore, margin is the greater of $$IM'$$ and Maintenance Margin: $$M = \max(IM',\ MM)$$ Where: $$IM' = \left(\max\left(0.15 \times P\_{index} - \text{OTM Discount},\ 0.10 \times P\_{mark}\right) + P\_{mark}\right) \times Q$$ {% hint style="info" %} This is the greater of 15% index-based risk (less any OTM discount) or a 10% mark-price floor, plus the mark price of the option. It also ensures Initial Margin never falls below Maintenance Margin. {% endhint %} #### Maintenance Margin (Short Call or Short Put) In Short Calls or Short Puts, Maintenance Margin is used for [liquidation monitoring](/trading/options/margin-and-liquidation.md): $$MM = \left(\max\left(0.05 \times P\_{index} - \text{OTM Discount},\ 0.05 \times P\_{mark}\right) + P\_{mark}\right) \times Q$$ {% hint style="info" %} This is the greater of 5% index-based risk (less any OTM discount) or a 5% mark-price floor, plus the mark price of the option. {% endhint %} #### Mark Price Floor (Calls & Puts) Rails prices options using [Black-76](/trading/options/black-76-and-the-greeks.md) and applies an intrinsic value floor to prevent a mark price below [intrinsic value](#intrinsic-value). **For calls:** $$P\_{mark} = \max\left(P\_{call},\ \max(F - K,0)\right)$$ **For puts:** $$P\_{mark}= \max\left(P\_{put},\ \max(K - F,0)\right)$$ #### OTM Discount (Short Calls and Puts) For **short calls,** the OTM discount reduces short-call margin when the call is out of the money: * $$\text{OTM Discount} = \max(0,\ K - P\_{index})$$ For short puts, the OTM discount reduces short-put margin when the put is out of the money: * $$\text{OTM Discount} = \max(0,\ P\_{index} - K)$$ #### Position Mark Value Positions Mark Value is the mark-to-market value of all open positions: $$\text{Positions Mark Value} = \sum\_{i} \left( P\_{mark,i} \times Q\_i \times S\_{i}\right)$$ ### Pricing, Fees & Settlement #### Premium Option premiums are calculated using the Black-76 formula. Given the complexity, the formula and details are explained in our article on [Black-76 and the Greeks](/trading/options/black-76-and-the-greeks.md). #### Intrinsic Value Intrinsic value is the option's immediate exercise value — what it would be worth if exercised right now. **For calls:** $$\text{Intrinsic Value} = \max(F - K,\ 0)$$ **For puts:** $$\text{Intrinsic Value}= \max(K - F,\ 0)$$ #### Payoff At settlement, if the contract is ITM, the contract seller pays the payoff ([intrinsic value](/trading/options/options-metrics-guide.md#intrinsic-value) at the Settlement Price) to the buyer, else the contract expires worthless. **For calls:** $$PO = Q \times \max(P\_{settle} - K,\ 0)$$ **For puts:** $$PO = Q \times \max(K - P\_{settle},\ 0)$$ #### Transaction Fee The transaction fee applied to each options trade (other than at expiry) is calculated as: $$ Fee\_{txn} = \min(0.0003 \times P\_{index},\ 0.125 \times P\_{mark}) \times Q $$ The 12.5% cap on the mark price prevents the fee from ever exceeding a fair proportion of the premium. Deep out-of-the-money contracts can have a premium close to zero, so charging on the index price alone would be disproportionate; the MIN function ensures the fee stays reasonable relative to the premium. #### Delivery Fee Long Options Positions that expire profitably (ITM) are settled with a delivery fee, calculated as: $$ Fee\_{del} = \min(0.00015 × P\_{index} × Q,PO) $$ The delivery fee is capped at the payoff, so you never pay more in delivery fees than the option pays out. #### Withdrawal Fee Rails deducts a withdrawal fee to cover network costs when you withdraw amounts from the platform, calculated as: $$ Fee\_{wd} = \min(0.001 \times \text{Withdrawal Amount},\ 1) $$ The fee is 0.1% of the amount you withdraw, up to a maximum of $1 per withdrawal. The covers the network costs - like gas fees - we pay to process your withdrawal. It isn’t a Rails platform fee. #### Liquidation Fee If a position is liquidated, Rails charges a liquidation fee of 1% of the liquidated value, calculated as: $$ Fee\_{liq} = 0.01 \times \text{Liquidated Value} $$ #### Settlement P\&L Your Realized P\&L is calculated at expiry, *before* fees, using the formulas below: * **Long call:** $$P\&L = Q \times \max(P\_{settle} - K,0) - Q \times p\_{paid}$$ * **Long put:** $$P\&L = Q \times \max(K - P\_{settle},0) - Q \times p\_{paid}$$ * **Short call:** $$P\&L = Q \times p\_{rcvd} - Q \times \max(P\_{settle} - K,0)$$ * **Short put:** $$P\&L = Q \times p\_{rcvd} - Q \times \max(K - P\_{settle},0)$$