Glossary

Key terms used across Theta Labs.

B

Buying power The total USDC available in your connected wallets that can be deployed into new trades. Buying power decreases when you open a position and increases when you close one or receive a settlement payout.

C

Call option A contract that gives you the right to profit if the underlying market’s implied probability rises above the strike price before expiry. When you buy a call, you pay a premium upfront, which is your maximum loss. See also: Put option, Strike price, Premium.

CLOB (Central Limit Order Book) The trading mechanism used by Polymarket. A CLOB matches buy and sell orders based on price and time priority, similar to how stock exchanges work. When you place an order, it is either matched against an existing resting order or sits in the book until a counterparty appears.

Collateral The funds you must lock up as security when you sell (write) an options contract. Collateral covers your maximum potential payout obligation to the buyer. It is released when the contract expires or is closed.

Condition ID A unique identifier assigned to each market on Polymarket. It is used by the underlying protocol to track and settle positions for that specific market.

D

Delta An options Greek that measures how much an option’s price is expected to change for a one-unit move in the underlying market’s probability. A delta of 0.50 means the option’s value should increase by roughly $0.50 for every$1.00 increase in the underlying share price. See also: Greeks.

E

Embedded wallet A wallet that is created and managed inside the Theta Labs app using Privy, with no external browser extension required. When you sign in with email or a social account, an embedded wallet is provisioned automatically and holds your USDC for trading.

Event The real-world occurrence that a prediction market is asking about — for example, “Will the Federal Reserve cut rates in Q3?” or “Who will win the 2025 World Series?” A single event may have multiple associated markets (YES/NO questions about different aspects of the same event).

Expiry date The date and time after which an options contract can no longer be traded and will be settled based on where the underlying market is trading at that moment. For spot markets, “expiry” typically refers to the market’s resolution date.

G

Greeks A set of metrics that measure how an option’s price is expected to respond to changes in different factors. The main Greeks are:

• Delta — sensitivity to a change in the underlying market’s probability
• Gamma — rate of change of delta; how quickly delta itself shifts as the market moves
• Theta — time decay; how much value an option loses each day as it approaches expiry
• Vega — sensitivity to changes in implied volatility of the underlying market

I

Implied probability The market-consensus likelihood that an event resolves YES, expressed as a price between $0.00 and$1.00 (or equivalently, 0% to 100%). A YES share trading at $0.72 implies a 72% probability of YES. Prices update continuously as traders buy and sell.

K

Kalshi A US-regulated prediction market exchange operating under CFTC oversight. Kalshi settles contracts in USDC on the Solana blockchain and is available to eligible US residents. Theta Labs aggregates Kalshi markets alongside Polymarket markets.

L

Liquidity A measure of how easy it is to buy or sell shares in a market without significantly moving the price. High-liquidity markets have many resting orders at tight spreads; low-liquidity markets may have wide spreads or large price impact for moderate-sized trades.

M

Market order An order to buy or sell shares immediately at the best available price in the order book. Market orders are filled quickly but give you no price guarantee — in thin markets, the fill price may differ meaningfully from the last traded price.

N

Narrative A curated basket of thematically related prediction markets that can be traded as a single position on Theta Labs. Narratives let you take broad exposure to a theme — such as a major election or economic event — without managing each individual market separately.

NO share A binary outcome token that pays $1.00 if the market resolves NO (the event does not happen) and$0.00 if it resolves YES. Buying NO shares is equivalent to betting against the event occurring.

O

Open interest The total number of outstanding (unsettled) contracts or shares across all participants in a given market. Higher open interest generally indicates greater market participation.

Options Contracts that give the holder the right to profit from a directional move in a market’s implied probability by a specified expiry date. On Theta Labs, options are currently paper trading only. You can buy calls, buy puts, or sell contracts to collect premium.

P

P&L (Profit and Loss) The total gain or loss on your trading activity. P&L is split into unrealized (open positions valued at current market prices) and realized (closed or settled positions). See also: Unrealized P&L, Realized P&L.

Paper trading Simulated trading using virtual money. Options trading on Theta Labs is paper trading — you start with a $1,000 virtual balance and no real capital is at risk. It lets you practice strategies and learn the platform before live options launch.

Polymarket A decentralized prediction market exchange built on the Polygon blockchain. Polymarket settles in USDC.e and uses a Central Limit Order Book for trade matching. It is not available to US residents. Theta Labs aggregates Polymarket markets alongside Kalshi markets.

Premium The price you pay to buy an options contract (call or put). The premium is your maximum possible loss as a buyer — you cannot lose more than what you paid, regardless of how the market moves. When you sell options, the premium is the income you collect upfront, but you take on an obligation backed by collateral.

Put option A contract that gives you the right to profit if the underlying market’s implied probability falls below the strike price before expiry. When you buy a put, you pay a premium upfront, which is your maximum loss. See also: Call option, Strike price, Premium.

R

Realized P&L The gain or loss from positions you have already closed or that have been settled. Once a trade is closed, the P&L moves from unrealized to realized and is locked in.

S

Settlement The process by which a resolved market pays out to shareholders. On resolution, each YES share on the winning side pays $1.00 and each losing-side share pays$0.00. Settlement is handled automatically by the underlying exchange (Polymarket or Kalshi) and credited to your wallet.

Spot trading Buying and selling YES or NO shares directly on a prediction market at the current market price. Spot trading on Theta Labs uses real funds and settles in USDC. It is distinct from options trading, which is currently paper trading only.

Strike price In prediction market options, the strike price is a probability threshold rather than a dollar price. A call option with a 40% strike profits when the underlying market’s implied probability trades above 40%. A put option with a 60% strike profits when the market trades below 60%. See also: Implied probability.

T

Theta As an options Greek, theta measures how much an option’s value decreases each day simply due to the passage of time, all else equal. Options lose value as they approach expiry; theta quantifies this daily decay. Theta is also the inspiration for the name “Theta Labs.”

U

Unrealized P&L The gain or loss on positions you still hold, calculated using the current market price. Unrealized P&L changes continuously as market prices move. It becomes realized P&L when you close the position or the market settles.

V

Volume (24h) The total value of trades executed in a market over the past 24 hours, expressed in USDC. Volume is a useful signal of market activity and interest; high-volume markets tend to have better liquidity and tighter spreads.

W

Watchlist A personal list of markets you follow on Theta Labs. Adding a market to your watchlist lets you monitor its price and activity without having an open position in it.

Y

YES share A binary outcome token that pays $1.00 if the market resolves YES (the event happens) and$0.00 if it resolves NO. Buying YES shares is equivalent to betting that the event will occur.