Mondo Market Example Transaction

In this example, we will use the LeBron James Trophy King Asset ($LBJ23) to create the 44PTSLBJ market based on a specific data target of 44 points. The 44PTSLBJ market is essentially a set of calls and puts that are based on LeBron James’ point accrued during the trading period.

Analysts release 100,000 calls and 40,000 puts to the 44PTSLBJ market and may be purchased with any TKA. The price of the calls and puts is determined by Trophy King analysts based on various data assessment tools. For this example, one call of the 44PTSLBJ market, meaning a user believes LeBron James will score 44 or more points during the trading period, can be purchased for 0.5 $LBJ/44PTSLBJ or 0.75 $KD35/44PTSLBJ. In contrast, one put of the 44PTSLBJ market, meaning a user believes LeBron James will score less than 44 points during the trading period, can be purchased for 0.85 $LBJ/44PTSLBJ or 1 $KD35/44PTSLBJ.

After the derivatives market opens, users can trade their purchased calls and puts for any TKA within the market at whatever rate the market values them. During the trading period, the value of call or puts could rise or fall based on the likelihood of LeBron James hitting the data target. Upon closing of the trading period if the data target is hit participants holding calls of the 44PTSLBJ market will reconcile at 1:1 with the underlying asset, in this case the $LBJ Trophy King Asset and vice versa if the data target of the put is hit. If the put or call is missed the derivative asset is reconciled at whatever ratio determined by the Trophy King analysts.