> For the complete documentation index, see [llms.txt](https://ethosx.gitbook.io/ethosx-kanalabs-operps/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://ethosx.gitbook.io/ethosx-kanalabs-operps/getting-started-with-operps/settlement-cycles/settlement-calculations-and-logic.md).

# Settlement - Calculations and Logic

Settlement happens in OPerps every hour which consists of token transfers between Long OPerps pool and Short OPerps pool, depending upon the % price change in the underlying asset. 

{% hint style="info" %}
All Buy/ Sell orders placed during the cycle also get executed during the settlement.
{% endhint %}

<figure><img src="/files/dtCN8KCF0nXbTaLNOIIb" alt=""><figcaption></figcaption></figure>

### Premium

Long OPerps holders pay premium to Short OPerps holders in every settlement independent of price change in the underlying asset.&#x20;

<figure><img src="/files/TrRytVfgPUJtB71zCZFt" alt=""><figcaption></figcaption></figure>

### Payoff

Short OPerps holders pay Long OPerps holders depending upon the underlying price movement.

#### CALL Operps

Short Call OPerps holders pay Long Call OPerps holders only if the price of the underlying asset has increased during the cycle.&#x20;

<figure><img src="/files/42sDYBi9lBFkA5xkhcC2" alt=""><figcaption></figcaption></figure>

#### PUT Operps

Short Put OPerps holders pay Long Put OPerps holders only if the price of the underlying asset has decreased during the cycle.

<figure><img src="/files/b2C0WoAqkZU0ITJAkk2k" alt=""><figcaption></figcaption></figure>

Payoff is proportional to the change in underlying price. For  x% change in underlying price (rise for Calls and fall for Puts) x% tokens are transferred from respective Short Pool to the Long Pool.&#x20;

```mathml
Call Payoff = Min(% Price rise, 2.5%)
Put Payoff = Min(% Price fall, 2.5%)
```

{% hint style="info" %}
Max Loss for Short Operps holders in a cycle is limited to 2.5%.
{% endhint %}

{% hint style="info" %}
Even when Short OPerps holders pay Long OPerps holders for the market movement, they still receive the premium from Long OPerps holders.
{% endhint %}


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://ethosx.gitbook.io/ethosx-kanalabs-operps/getting-started-with-operps/settlement-cycles/settlement-calculations-and-logic.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.