From b29eeb99cd5f1a03b5b5cfc6e707b4cdb83639d7 Mon Sep 17 00:00:00 2001
From: Regynald Augustin <github@regynald.com>
Date: Sun, 24 Apr 2022 22:02:58 -0400
Subject: [PATCH] Better functionality and test for spread bidding

---
 src/HookCoveredCallImplV1.sol     |  17 ++---
 src/test/HookCoveredCallTests.sol | 103 ++++++++++++++++++++++++++++++
 2 files changed, 112 insertions(+), 8 deletions(-)

diff --git a/src/HookCoveredCallImplV1.sol b/src/HookCoveredCallImplV1.sol
index 3fed6bf..0b0003f 100644
--- a/src/HookCoveredCallImplV1.sol
+++ b/src/HookCoveredCallImplV1.sol
@@ -257,9 +257,6 @@ contract HookCoveredCallImplV1 is
         uint256 bidAmt = msg.value;
         CallOption storage call = optionParams[optionId];
 
-        // TODO(HOOK-805) allow option writer to make a bid with an deposited amount equal
-        // to the spread between the their bid and the option's strike price.
-
         uint256 normalizedBid = bidAmt;
 
         if (call.writer == msg.sender) {
@@ -352,12 +349,16 @@ contract HookCoveredCallImplV1 is
         (bool sent, ) = ownerOf(optionId).call{value: spread}("");
         require(sent, "Failed to send Ether to option holder");
 
-        // return send option holder their earnings
-        (
-            bool writerSent, /* bytes memory writerData */
 
-        ) = call.writer.call{value: call.strike}("");
-        require(writerSent, "Failed to send Ether to option writer");
+        // If the option writer is the high bidder then they don't recieve the strike and only the underlying asset
+        if (call.highBidder != call.writer) {
+            // return send option holder their earnings
+            (
+                bool writerSent, /* bytes memory writerData */
+
+            ) = call.writer.call{value: call.strike}("");
+            require(writerSent, "Failed to send Ether to option writer");
+        }
 
         if (returnNft) {
             IHookERC721Vault(call.vaultAddress).withdrawalAsset();
diff --git a/src/test/HookCoveredCallTests.sol b/src/test/HookCoveredCallTests.sol
index 7ea9878..40ae459 100644
--- a/src/test/HookCoveredCallTests.sol
+++ b/src/test/HookCoveredCallTests.sol
@@ -596,6 +596,65 @@ contract HookCoveredCallBidTests is HookProtocolTest {
         vm.expectRevert("bid - bid is lower than the current bid");
         calls.bid{value: 0.09 ether}(optionTokenId);
     }
+
+    function testWriterCanBidOnSpread() public {
+        vm.deal(writer, 1 ether);
+        vm.warp(block.timestamp + 2.1 days);
+
+        vm.prank(writer);
+        calls.bid{value: 1}(optionTokenId);
+
+        assertTrue(
+            calls.currentBid(optionTokenId) == 1001, 
+            "bid 1 wei over strike price"
+        );
+        assertTrue(
+            calls.currentBidder(optionTokenId) == writer, 
+            "writer should be highest bidder"
+        );
+        assertTrue(
+            writer.balance == 1 ether - 1,
+            "writer should have only used 1 wei to bid"
+        );
+    }
+
+    function testWriterCanOutbidOnSpread() public {
+        address firstBidder = address(37);
+        vm.label(firstBidder, "First option bidder");
+        vm.deal(firstBidder, 1 ether);
+        vm.deal(writer, 1 ether);
+
+        uint256 firstBidderStartBalance = firstBidder.balance;
+        uint256 writerStartBalance = writer.balance;
+
+        vm.warp(block.timestamp + 2.1 days);
+
+        vm.prank(firstBidder);
+        calls.bid{value: 0.1 ether}(optionTokenId);
+
+        uint256 strike = 1000;
+        uint256 bidAmount = 0.1 ether - strike + 1;
+
+        vm.prank(writer);
+        calls.bid{value: bidAmount}(optionTokenId);
+
+        assertTrue(
+            calls.currentBid(optionTokenId) == 0.1 ether + 1, 
+            "high bid should be 0.1 ether + 1 wei"
+        );
+        assertTrue(
+            calls.currentBidder(optionTokenId) == writer, 
+            "writer should be highest bidder"
+        );
+        assertTrue(
+            firstBidderStartBalance == firstBidder.balance,
+            "first bidder should have been refunded their bid"
+        );
+        assertTrue(
+            writer.balance == 1 ether - bidAmount,
+            "writer should have only used 0.1 ether + 1 wei to bid"
+        );
+    }
 }
 
 
@@ -720,6 +779,50 @@ contract HookCoveredCallSettleTests is HookProtocolTest {
         vm.expectRevert("settle -- the call cannot already be settled");
         calls.settleOption(optionTokenId, true);
     }
+
+    function testSettleOptionWhenWriterHighBidder() public {
+        vm.startPrank(writer);
+        uint256 underlyingTokenId2 = 1;
+        token.mint(writer, underlyingTokenId2);
+        vm.deal(writer, 1 ether);
+
+        uint256 buyerStartBalance = buyer.balance;
+        uint256 writerStartBalance = writer.balance;
+
+        // Writer approve operator and covered call
+        token.setApprovalForAll(address(calls), true);
+
+        uint256 expiration = block.timestamp + 3 days;
+
+        uint256 optionId = calls.mint(
+            address(token),
+            underlyingTokenId2,
+            1000,
+            expiration,
+            makeSignature(underlyingTokenId2, expiration, writer)
+        );
+
+        // Assume that the writer somehow sold the option NFT to the buyer.
+        // Outside of the scope of these tests.
+        calls.safeTransferFrom(writer, buyer, optionId);
+
+        // Option expires in 3 days from current block; bidding starts in 2 days.
+        vm.warp(block.timestamp + 2.1 days);
+        calls.bid{value: 1 wei}(optionId);
+        vm.warp(block.timestamp + 1 days);
+
+        calls.settleOption(optionId, false);
+
+        assertTrue(
+            buyerStartBalance + 1 wei == buyer.balance, 
+            "buyer gets the option spread (winning bid of 1001 wei - strike price of 1000)"
+        );
+
+        assertTrue(
+            writerStartBalance - 1 == writer.balance, 
+            "option writer only loses spread (1 wei)"
+        );
+    }
 }