Terms and Definitions

Position

In Vanilla Finance's Profit Swap Contract, a position refers to the active state of a user’s trade after purchasing a specific contract. It represents:

• The direction of the trade (Call or Put).

• The quantity of the contract purchased, determining exposure to potential profits or losses.

Entry

The entry price is the initial index price of the underlying asset at the time the user purchases the Profit Swap Contract. This price becomes the benchmark for calculating potential gains or losses upon settlement.

Invest

To invest in a Profit Swap Contract means paying a fixed premium cost (e.g., 10 USDT) to gain exposure to the price movements of the underlying asset (e.g., BTC).

• Unlike spot or perpetual trading, there is no margin requirement, making investment risk fixed and predictable.

Profit

Profit refers to the financial gain a user earns from a trade. For Profit Swap Contracts, this is determined at settlement by the formula:

Profit = (Settlement Price - Entry Price) × Direction × Quantity

Here:

• Direction is 1 for Call and 1 for Put.

• Settlement price is the underlying asset's index price at the time of manual or automatic contract settlement.

ROI (Return on Investment)

ROI measures the return a user achieves relative to their initial investment. For Profit Swap Contracts, it often reflects the leverage effect, as users can gain significant returns by investing only a small premium.

• Formula: ROI = (Profit / Premium Paid) × 100%