# Covered Call

Zoe v0.5.0. Last updated 4/20/2020.
# View the code on Github (Last updated: 4/22/2020)
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In a covered call, the owner of a digital asset sells a call option. A call option is the right to buy the digital asset at a certain price, called the strike price. The call option has an expiry date, at which point the contract is cancelled.

In this contract, the expiry date is represented by the deadline at which the owner of the digital asset's offer is cancelled. Therefore, the owner of the digital asset's proposal exit must be "afterDeadline".

The invite that the creator of the covered call receives is the call option and has the following additional information in the extent of the invite: { expirationDate, timerAuthority, underlyingAsset, strikePrice }.

# Making A Call Option

Let's say Alice wants to create a covered call. She creates the first proposal just like she would create the first proposal in the atomic swap.

const issuerKeywordRecord = harden({
  UnderlyingAsset: moolaIssuer,
  StrikePrice: simoleanIssuer,

const aliceInvite = await zoe.makeInstance(

// Alice escrows with Zoe
const moola = moolaAmountMath.make;
const simoleans = simoleanAmountMath.make;
const aliceProposal = harden({
  give: { UnderlyingAsset: moola(3) },
  want: { StrikePrice: simoleans(7) },
  exit: { afterDeadline: { deadline: 1, timer } },

const alicePayments = { UnderlyingAsset: aliceMoolaPayment };

  // Alice makes an offer and gets an option as the outcome
const { outcome: optionP, payout: alicePayoutP } = await E(zoe).offer(

const option = await optionP;

This option is a full ERTP payment and can be escrowed and used in other contracts. For instance, if Alice is the user to makes the first proposal and gets the option (a Zoe invite) in return, she can send it to Bob, who can either exercise the call option or sell it in another contract, say, an atomic swap:

const inviteIssuer = zoe.getInviteIssuer();
const bobExclOption = await inviteIssuer.claim(option);

// Let's imagine that Bob wants to sell the invite for the call option.
// He can create a swap to trade this invite for bucks.
const swapIssuerKeywordRecord = harden({
  Asset: inviteIssuer,
  Price: bucksR.issuer,
const bobSwapInvite = await zoe.makeInstance(swapInstallationId, swapIssuerKeywordRecord);

// Bob wants to swap the invite with the same units as his
// current invite from Alice. He wants 1 buck in return.
const bobProposalSwap = harden({
  give: { Asset: inviteIssuer.getAmountOf(bobExclOption) },
  want: { Price: bucks(1) },

const bobPayments = harden({ Asset: bobExclOption });

// Bob escrows his option in the swap and gets an invite as the outcome that he can send to Dave
const { outcome: bobSwapInviteP, payout: bobPayoutP } = await E(zoe).offer(

const daveSwapInvite = await bobSwapInviteP;

Bob now has a call option, in the form of an invite, ready to sell via an atomic swap contract.

# Buying An Option

Another user, let's call him Dave, is looking to buy the option to trade his 7 simoleans for 3 moola, and is willing to pay 1 buck for the option. He is interested in Bob's swap invite so he checks that this instance matches what he wants. He can check the balance of the invite to see what contract it is for, and any contract-provided information about what the invite can be used for.

// Check the balance
const {
  extent: [{ instanceHandle: swapInstanceHandle }],
} = inviteIssuer.getAmountOf(daveSwapInvite);

const {
  installationHandle: daveSwapInstallId,
  issuerKeywordRecord: daveSwapIssuers,
} = zoe.getInstance(swapInstanceHandle);

Dave can safely proceed with the swap because he knows that if Bob has lied about the swap then Dave's offer will be rejected and he will get a refund.

// Dave escrows his 1 buck with Zoe and forms his proposal
const daveSwapProposal = harden({
  want: { Asset: optionAmount },
  give: { Price: bucks(1) },

const daveSwapPayments = harden({ Price: daveBucksPayment });

const { outcome, payout: daveSwapPayoutP } = await E(zoe).offer(

const daveSwapPayout = await daveSwapPayoutP;
const daveOption = await daveSwapPayout.Asset;
const daveBucksPayout = await daveSwapPayout.Price;

# Exercising the Option

Now that Dave owns the option he can exercise the option. He can exercise the option by submitting an offer that pays the required exercise price in exchange for the underlying asset:

const daveCoveredCallProposal = harden({
  want: { UnderlyingAsset: moola(3) },
  give: { StrikePrice: simoleans(7) },

const daveCoveredCallPayments = harden({
  StrikePrice: daveSimoleanPayment,

const {
  payout: daveCoveredCallPayoutP,
} = await E(zoe).offer(