BTC Option Trading – Platform Comparison If you want to trade Bitcoin on a more professional level you can either use Bitcoin Futures or Bitcoin Options. So far only a handful of platforms support BTC Options trading and most of them still have very low liquidity. Dec 22, · In response to growing interest in cryptocurrencies and customer demand for tools to manage bitcoin exposure, CME options on Bitcoin futures (BTC) are now trading. The value of options on Bitcoin futures is based on the regulated CME CF Bitcoin Reference Rate (BRR) and settles into actively traded Bitcoin futures. May 03, · Introduction to Bitcoin Options Options are a type of derivative contract that give its owner the right to buy or sell an asset at a specific price (the .
Btc options tradingHow to Trade Bitcoin Options in the United States - Bitcoin Market Journal
Bitcoin options are now offered by various providers, including the FTX platform, which is affiliated with Binance.
Options are also widely used on traditional stock exchanges and their unique selling point is, as the name suggests, that these deals are optional for the buyer. They are therefore not obliged to exercise their option. This is the key difference compared to bitcoin futures, which are executed as a forward transaction and are binding for both parties on the agreed date.
The decisive parameters for BTC options A glance at the bitcoin options charts, on FTX for example, shows seven columns that are important for traders. Calculate bitcoin options easily If we now take a look at typical BTC options, you should be able to understand the principle quickly.
For this he was prepared to pay a premium of USD But since he paid a USD premium, the buyer is making a loss. At prices between 9, and 9,, the buyer will still exercise his bitcoin option because this reduces losses. The seller receives the premium on the date the transaction is concluded and in return undertakes to deliver the agreed BTC to the buyer on the due date at the agreed price, if the buyer so wishes.
In our example this means: At a price from BTC to 9, the seller makes a profit. He calculates the current price of BTC against premium and selling price of his Bitcoin option. At prices of more than 9, US dollars, the seller of bitcoin options in our example is annoyed because he could have realized higher profits on the free market despite the risk premium. Conclusion on bitcoin options. For you as an investor, the following factors are of prime importance with BTC options: For the buyer, the maximum risk of loss of a bitcoin option is described by the premium, while the chances of winning are theoretically infinite due to the ratio of the target price to the actual price.
For the seller of bitcoin options, the premium is equal to the maximum winning amount. Thus, in addition to the price forecast, the negotiated premium is the decisive factor as to whether a bitcoin option ultimately pays off for the buyer or the seller.
This will result in a profit as long as the asset moves far from said strike price. Bitcoin investors can use this strategy if they expect BTC to make a big move, like during an important event or period of low volatility, but are unsure which direction the move will happen.
Options are still a very new derivatives product in the Bitcoin economy. Hence, there are still significantly less avenues to trade it than the more adopted Bitcoin Futures contracts. At the time of writing, by far the most popular Bitcoin Options exchange is Deribit. Deribit currently offers 6 different expiry dates with 20 different strike prices for each.
The simple user interface and low trading fees 0. More sophisticated options traders might want to have a look at FTX , which recently also launched Bitcoin Options. On the contrary to Deribit, FTX does not have a pre-set options orderbook and traders can instead manually design their own option. After just 10 seconds, the exchange will present you a bid and ask price, which you can chose to fill or not.
Pascal Thellmann is an algorithmic trader mostly focused on market making. You can get in touch with Pascal on LinkedIn or Twitter. Here are lots of ups and downs in the cryptocurrency market.
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