Charm is a protocol for creating liquidity for decentralized options. Charm uses a unique automated market-making mechanism designed specifically for options trading on the blockchain, without the use of secondary markets or pricing formulas. A deep dive review was done a few weeks ago so don’t hesitate to take a look at it if you want more details on the underlying mechanism behind it.
The major risk associated with Charm.fi is the fact that the smart contract is not fully audited. A previous version was but since the addition of new features, a full audit of the updated codebase hasn’t been done yet which makes it more risky to participate in the protocol. If you plan on investing in Charm or participating in the protocol, it might be a good choice to use an insurance if some exists in Armor or similar projects.