Cryptocurrency Options Trading

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Key Benefits

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Affordability

Using low-cost trading instead of storing the underlying crypto

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Hedging Risk

Limit downside risk and take advantage of all the upside benefits

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High-profit Potential

Using leverage, spend less and make almost as much or more

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FAQs About Cryptocurrency Options Trading

Here are some frequently asked questions about BIT’s options.

What is an Option?

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Options are financial instruments that are derivatives based on the value of underlying securities such as stocks, commodities, foreign exchange or cryptocurrency. An option contract offers the buyer the right but not the obligation to buy or sell—depending on the type of contract they hold—the underlying asset, while the sellers are obliged to buy or sell if the option expires in-the-money. Unlike futures, the holder is not required to buy or sell the asset if they choose not to. Traders buying option contracts, either call or put options, are called option buyers or option holders, while those who sell them are called option sellers or option writers. Read more>

Types of Options?

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European and American options

Options can be divided into European and American options according to the method of execution. If the option can only be executed on the expiration date, it is called a European option; if the option can be executed at any time on and before the expiration date, it is called an American option.

Call and Put options

According to the type of purchase and sale, options can be divided into call options and put options.

A call option is the right to "buy the underlying asset" at the strike price on the expiration date. The buyer of a call option bets on an increase in the price of the asset.

A put option is the right to "sell the underlying asset" at the strike price on the expiration date. The buyer of a put option bets that the price of the asset will fall. Read more>

What is Cryptocurrency Options Trading?

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Crypto options trading is a novel way to speculate on digital assets, and it's rapidly gaining popularity among crypto enthusiasts. Unlike traditional crypto trading, which tends to be speculative and risky, crypto options trading is a more conservative and predictable way to trade. Here's how it works: you choose an asset like Bitcoin (BTC) and predict whether its price will go up or down over a certain period of time. If your prediction is correct, you make a profit; if not, you lose your investment. Crypto options trading is a high-risk, high-reward activity, and it's important to understand the risks before getting started. However, for those who are willing to take the plunge, crypto options trading can be a fun and innovative way to get involved in the digital currency space.

How to Trade Cryptocurrency Options

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If you're thinking about trading crypto options, there are a few things you need to know. Crypto options are a type of derivative that gives you the right, but not the obligation, to buy or sell an underlying asset at a set price. They can be used to hedge your portfolio or speculate on the future price of an asset.

Crypto options are traded on crypto exchanges and can be bought and sold just like any other crypto asset. When buying crypto options, you'll need to choose an expiration date, strike price, and whether you want a call or put option. A call option gives you the right to buy an asset at a certain price, while a put option gives you the right to sell an asset at a certain price. If the price of the underlying asset is above the strike price at expiration, then the option expires in the money and you'll make a profit. If the price is below the strike price, then the option expires out of the money and you'll lose your investment.

Crypto options trading is a risky form of trading, but it can be profitable if done correctly. Before attempting to trade crypto options, it is important to understand the risks involved and learn as much as possible about how the market works.

BIT: Your Go-To Cryptocurrency Trading Platform

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BIT enables you to trade bitcoin options and enjoy the benefits of crypto trading with the security of a regulated exchange. With our innovative platform, you can trade bitcoin with leverage, manage your own risk, and take advantage of market volatility. Whether you're a seasoned trader or new to the world of cryptocurrency, BIT is the perfect platform for you. Sign up today and start trading or contact us to learn more.

What types of options are available on BIT?

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BIT options are European-style options contracts on cryptocurrencies, allowing users to buy or sell cryptocurrency options and exercise on the expiration date.

As the buyer of the option, the user need to pay the seller a premium when buying the option, and BIT will automatically exercise or not exercise the option for the buyer on the expiration date based on the price of the underlying asset.

As the seller of the option, the user will receive the premium paid by the buyer, and meanwhile will be required to pay a portion of the margin as a guarantee when selling the option. In addition, the option seller will be required to cooperate with the execution or non-execution of the contract on the expiration date, and the system will release the account margin of the seller if there is no need to exercise the option on the expiration date.

 

Product Description

The options products of BIT are classified into coin-margined options and USD-margined options according to the denomination and settlement currency.

Currently, BIT supports three types of coin-margined option products: BTC, ETH and BCH.

Also, BIT supports two types of USD-margined option products: BTC and ETH.

Please note that USD margined options are only available for Unified Margin Mode (UM) users, but not for Classic Mode users (see how to migrate to UM Mode). Read more>

What are Option Fees Charged?

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Trading fee

Trading fee (Coin-margined option)= position size * fee rate

Trading fee (USD-margined option)= position size * index price * fee rate

Maker Fee: 0.02%

Taker Fee: 0.05%

Check tiered fee rate

Note: Taker/Maker Fee cannot be higher than 12.5% of the option value. 

 

Delivery fee

Delivery fee (Coin-margined option) = position size * fee rate

Delivery fee (USD-margined option) = position size * delivery price * fee rate

Delivery fee rate:

0% for daily options

0.015% for all other options (Delivery fee cannot be higher than 12.5% of the option value)

 

Forced liquidation fee

Forced liquidation fee (Coin-margined option) = position size * fee rate

Forced liquidation fee (USD-margined option) = position size * index price * fee rate

Liquidation fee rate: 0.5%

The liquidation fee after subtracting trading fee will be automatically allocated into the BIT insurance fund.

For example, if a liquidation order is filled as a taker order, 0.45% of the order value will be allocated into the insurance fund and 0.05% of the order value will be charged as a regular taker fee, which adds up to a total liquidation fee of 0.5% of the order value.

 

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