Exercise Option

$$\mathrm{Payoff}(S_T, K)= \begin{cases} \max(S_T-K,\,0), & \text{Call option},\\ \max(K-S_T,\,0), & \text{Put option}. \end{cases}$$

Where:

• S_T is the oracle price at the time of exercise
• K is the strike price

Before expiry, you can manually exercise an option only when it is in the money. Before expiry, you can also close the option by selling it back to the liquidity pool at the current Black-Scholes price.

At or after expiry, the backend keeper is expected to auto-exercise expired options, but on-chain settlement happens only when the auto-exercise instruction is submitted. If the option expires in the money, the payoff is sent to the owner token account.