Weekly Settlement Flow

Here is the full sequence of what happens each week when an options cycle closes.

Friday at market close, the engine evaluates every active covered call position. Each call either expired worthless (out of the money) or was assigned (in the money). The engine records the outcome for every asset, every position.

Monday at 9:00am ET, settlement runs:

1. 1.Premium collection. For each asset where calls expired worthless, the full premium collected at cycle entry is realized as income. For assigned positions, the engine calculates the net: premium received minus the cost of assignment (the difference between the strike and the closing price, applied pro-rata across enrolled positions).
2. 2.Protocol fee. 20% of gross premium is deducted. A portion flows to the Insurance Fund; the rest is protocol revenue.
3. 3.Senior priority. The net premium pool pays Senior's 7% annualized priority on a pro-rata weekly basis. If the premium pool in a given week is insufficient to cover the full 7% (which is rare but possible during low-vol stretches), the shortfall is noted and can be topped up from Insurance Fund surplus in subsequent weeks.
4. 4.Excess distribution. Any premium remaining after Senior's priority is split 25/75 between Senior and Junior.
5. 5.Lender payouts. Each lender's share is calculated based on their deposit size relative to their tranche's total. Payouts settle to wallets in stablecoins.
6. 6.Cycle re-entry. The engine immediately begins evaluating conditions for the next cycle. New covered calls are written at Friday's market open for positions that remain enrolled. Positions that were assigned with Auto-Roll enabled are rebuyed and re-enrolled automatically.

The entire flow is visible in the app's distribution view. Every cycle shows the gross premium, the protocol fee taken, any assignment outcomes, and the net amount distributed to your tranche.