Options are considered leveraged trading. When you purchase an option, you only put up a fraction of the capital required to purchase the underlying asset. Then, at a later date, you may profit from the full price difference of the asset.
This means that you can control whale-sized positions for a fraction of the price. By utilizing Uniswap Flash Swaps, you can exercise Hedgey calls and puts without actually needing to buy or sell the underlying asset.
Example
Let’s suppose the price of ETH is $1250, and you purchase a Call with a strike price of $1350 for $100. At some point before expiration, ETH's market value is now $1700, so you can now profit on the entire price difference of $450 while only putting up $100. This is called leverage.
In this scenario, upon exercising, you can either choose to buy ETH at $1250 (requiring you to actually own $1250), or you can cash close the position. Behind the scene, we use Uniswap Flash Swaps to sell $450 worth of ETH at $1700 and return the $450 in profit to you.
