Crypto Options: Top Exchanges And How to Trade Options on Crypto

  • November 17, 2022
  • 30 Min Read

What Are Crypto Options?

Crypto options are contracts that allow you to either buy or sell crypto on some future date for a price that’s agreed upon ahead of time. Options allow traders to make money on price movements, insure against losses, take leveraged positions, and more.

Like traditional options, crypto options unlock advanced trading strategies and greatly increase the ways you can potentially earn with crypto trading. At their core, crypto options are “derivatives” of cryptocurrency assets — meaning they derive their value from the underlying cryptocurrency.

Options are an agreement to either buy or sell a cryptocurrency, such as BTC or ETH, at some point in the future for a certain price. Each option has a price, known as a “premium,” that is normally a fraction of the price of the underlying asset.

Options can either be bought or sold, depending on what side of the trade you want to take. The buyer of the option has to pay the seller a premium for their purchase and gets to choose whether or not they want to exercise the option, while the seller is required to accommodate the buyer if they choose to exercise the option.

How Does Crypto Option Trading Work?

Crypto options are either “calls” or “puts.” Each option has an expiration date and price that the underlying asset can be traded at on the expiration date.

Buying a “call” option gives you the opportunity to buy a crypto like Bitcoin at a certain date in the future for an agreed-upon price. The date in the future is known as the “expiration date,” and the agreed-upon price is known as the “strike price.”

When the expiration date arrives, if the strike price of the call option is lower than what Bitcoin is trading for, you can exercise the option and make money by turning around and immediately selling Bitcoin for a profit.

Buying “put” options works the opposite way — they give you the opportunity to sell an asset like Bitcoin at a given price. If you have a put option and when the expiration date comes, Bitcoin is trading at less than the put option’s strike price, you can make money by purchasing Bitcoin on the open market for a lower price and selling it through your put option for a higher price.

Buying a call or put options contract gives you the right to buy or sell an underlying asset. For most option trades, however, underlying assets such as BTC or ETH rarely change hands. Since the value of the option contract itself is equal to the difference between the strike price and the market price of the underlying asset (such as BTC), most traders will just sell their option position to collect their upside. For example, if you buy a BTC call option for $1,000 (the option premium) with a strike price of $20,000 and BTC is trading for $25,000 at the expiration date, your call option will have a price (value) of $5,000. You can then sell the call option itself and net a profit of $4,000. This makes trading the options themselves the preferred method due to cost efficiencies when compared with trading the underlying asset.

Each call or put option can either be bought or sold. The above examples are the benefits you receive when buying a call or put option. When selling a call or put, you will receive an option premium from the buyer, which is your immediate upside, but you are obligated to follow through on your option contract. This means you must allow the option buyer to buy the asset from you if it’s a call option or purchase the asset from them yourself if it’s a put option.

It’s important to note that crypto options are different from crypto futures. Buying an option gives you the right but not the obligation to buy or sell the underlying asset, while futures require you to buy or sell the asset once you engage in the contract.

Expert Tip:

Both futures and options can be used to speculate or hedge crypto, but options provide traders with more flexibility for structuring unique trade setups.
-Ryan Grace, Head of Digital Assets at tastytrade.com.

Top Exchanges For Trading Crypto Options

*Note: Only European-type options trading is currently available on the following exchanges, and, for US residents, options trading through these exchanges is available only to certain individuals or not at all.

Assets SupportedFeesMinimum Order Size
DeribitBTC, ETH, SOLMaker Fees: Starting at 0.03% of the underlying asset value Taker Fees: Starting at 0.03% of the underlying asset value BTC options: 0.1 BTC ETH options: 1 ETH
BinanceETHTransaction fee: 0.02% of the underlying asset price, capped at 10% of the option’s value Exercise fee: 0.015% of the underlying asset price, capped at 10% of the option’s value0.01 ETH
Bit.comBTC, ETH, BCHMaker Fees: Starting at 0.02% of the underlying asset value Taker Fees: Starting at 0.05% of the underlying asset value Delivery Fees: 0.015% for all options except those with daily expiration dates0.01 BTC for USD-margined options 0.1 BTC, 1 ETH or 1 BCH for Coin-margined options
OKXBTC, ETH, SOLMaker fees: Starting at 0.02% of the underlying asset value Taker fees: Starting at 0.03% of the underlying asset value Options exercise fee: 0.02% (daily options excluded)BTC options: 0.01 BTC ETH options: 0.1 ETH SOL options: 1 SOL

Deribit

Trading Crypto Options with Deribit
Assets SupportedFeesMinimum Order Size
DeribitBTC, ETH, SOLMaker Fees: Starting at 0.03% of the underlying asset value Taker Fees: Starting at 0.03% of the underlying asset value BTC options: 0.1 BTC, ETH options: 1 ETH

Deribit is the largest Bitcoin derivatives exchange currently out there. It’s a top pick for advanced traders with deep liquidity across its markets and a host of advanced trading tools.

Pros

  • Most well-known crypto derivatives exchange
  • Insurance fund for increased security
  • Zero maker fees for SOL option trades

Cons

  • Not available to US traders
  • Accounts can only be funded using BTC
  • Complex platform may be confusing to beginners

Trading Crypto Options on Deribit

Deribit supports options trading for BTC, ETH, and SOL assets. Each option contract has a predetermined date and strike price that can be picked out of a basket of available options on the platform.

Option contracts are settled in the cryptocurrency of the underlying asset and are exercised automatically at the expiration date.

Fees

Deribit uses a maker/taker fee structure where traders who add liquidity to the order book (known as makers) pay smaller fees than those who take liquidity with their trades (takers). Below is a breakdown of the platform’s fees for option trades.

Maker FeesTaker Fees
BTC Options 0.03% of the underlying asset price or 0.0003 BTC per options contract 0.03% of the underlying asset price or 0.0003 BTC per options contract
ETH Options0.03% of the underlying asset price or 0.0003 ETH per options contract0.03% of the underlying asset price or 0.0003 ETH per options contract
SOL OptionsZero maker fees0.03% of the underlying asset price or 0.0003 SOL per options contract

Note: Option fees are limited to 12.5%.

Types of Options Available

Call and put options are available for:

  • BTC
  • ETH
  • SOL

Strike Prices

Deribit provides a predetermined set of strike prices for different assets. For Bitcoin, strike prices are either in increments of $1,000 or $250. For Ethereum, increments are in $25 or $50, and for SOL, strike prices are either in $1 or $2 increments.

Trading Crypto Options

Expiration Times

Deribit provides a range of predetermined expiration dates for its crypto options. These include daily, weekly, monthly, quarterly, and even yearly option contract lengths.

Trading Crypto Options

Max Leverage

Up to 100x for Bitcoin.

How Does Settlement Work?

Deribit options are all settled in the cryptocurrency of the underlying asset (settled in BTC for Bitcoin options, ETH for Ethereum options, and so on).

Options are exercised automatically if they are profitable, with the buyer’s account credited and the seller’s account debited for the transaction.

Read our full Deribit review.

How to Use Deribit For Trading Crypto Options


Step 1: Go to https://www.deribit.com/ and log in or create an account.

Trading Crypto Options

Step 2: Select Options from the top menu.

Trading Crypto Options

Step 3: Pick the option chain (expiry date for the option).

Trading Crypto Options

Step 4: You’ll be redirected to a table displaying many different options for the date you choose. You’ll see both a Bid and Ask column for each option.

Trading Crypto Options

Step 5: Click anywhere in the row to the right of the strike price to bring up the order form. Fill in the order form and hit the Buy button at the bottom left.

Trading Crypto Options

Step 6: A confirmation dialog will pop up. Click Create a buy order to complete the order.

Trading Crypto Options

Binance

Trading Crypto Options
Assets SupportedFeesMinimum Order Size
BinanceETHTransaction fee: 0.02% of the underlying asset price, capped at 10% of the option’s value Exercise fee: 0.015% of the underlying asset price, capped at 10% of the option’s value0.01 ETH

Binance is the largest crypto trading exchange in the world. As such, it has a stellar options trading interface that allows traders to trade ETH as an ETH/USDT option pair. While the platform has deep liquidity and an intuitive interface, advanced traders may feel restricted by its support for just one options asset.

Pros

  • Simple fee structure
  • Largest crypto exchange in the world
  • The native token, BNB, is one of the most highly valued cryptos

Cons

  • Can only buy ETH options, no support for BTC or other coins
  • No option for settling in ETH rather than in USDT
  • Not available to US traders

Trading Crypto Options on Binance

Binance allows traders to pick out options from a list with predetermined strike prices and expiration dates in set increments. The platform currently only supports ETH options, and any profits from option trading are settled in USDT at expiry.

Fees

Binance options come with two fees:

  • Transaction fee: 0.02% of the underlying asset price (capped at 10% of the option’s value)
  • Exercise fee: 0.015% of the underlying asset price (capped at 10% of the option’s value)

The transaction fee is paid whenever the option is purchased, while the exercise fee is paid only if the option is actually exercised (used).

Types of Options Available

Call and put options on ETH, settled in USDT.

Strike Prices

Binance offers options with a variety of strike prices that are available in increments of $50-$100 for its ETH options contracts.

Trading Crypto Options

Expiration Times

Options on Binance are settled daily, weekly, monthly, or quarterly.

  • Daily options expire at 08:00 UTC on the day of expiry.
  • Weekly options expire at 08:00 UTC on Friday of each week.
  • Monthly options expire at 08:00 UTC on the last Friday of every month.
  • Quarterly options expire at 08:00 UTC on the last Friday of every quarter.

Max Leverage

Up to 100x.

How Does Settlement Work?

Binance options are always settled in USDT.

How to Use Binance For Trading Crypto Options

Step 1: Go to Binance.com. Click Log In, or Register in the top-right corner if you don’t have an account.

Trading Crypto Options on Binance

Step 2: When logged in, select Derivatives > Options from the top menu.

Trading Crypto Options on Binance

Step 3: Checklist the terms and agreements and click Open Options Account.

Trading Crypto Options on Binance

Step 4: Add funds to your account by clicking Transfer.

Trading Crypto Options on Binance

Step 5: Select the underlying asset for the options you want to trade and select Call or Put option to open a position.

Trading Crypto Options

Step 6: Choose your order type, enter the Price and Amount for the option and click Buy. Congrats! You have bought an option.

Trading Crypto Options
Assets SupportedFeesMinimum Order Size
Bit.comBTC, ETH, BCHMaker Fees: Starting at 0.02% of the underlying asset value Taker Fees: Starting at 0.05% of the underlying asset value Delivery Fees: 0.015% for all options except those with daily expiration dates0.01 BTC for USD-margined options 0.1 BTC, 1 ETH or 1 BCH for Coin-margined options

Read our full Binance review.

Bit.com

Bit.com

Bit.com is a cryptocurrency exchange that primarily focuses on trading options and futures. The exchange features low fees, several supported options assets, and a variety of strike prices and expiration dates for their options.

Pros

  • Low maker and taker fees
  • Automatically settles profitable options and credits your account
  • Up to 10x leverage for options trades

Cons

  • Platform charges delivery fees in addition to trading fees
  • Not many assets available for options trading
  • Trade minimums are higher than on some other platforms

Trading Crypto Options on Bit.com

Bit.com separates its options trades into USD-M markets (settled in USD) and Coin-M markets (settled in the underlying coin). Between these two categories, the platform supports options for BTC, ETH, and BCH assets.

The fees for the platform are low and can be even lower depending on trade volume. At expiry, options which are profitable will be executed automatically and the profit credited to your account.

The platform also offers 10x leverage to options traders who want to increase the size of their positions using margin.

Fees

Bit.com charges maker/taker fees depending on whether a trade is adding liquidity to an exchange (subject to maker fees) or taking liquidity away (subject to taker fees).

The platform has a tiered structure for fees that depends on 30-day trading volume:

Trading Crypto Options

The platform also charges a delivery fee of 0.015% for all options except daily options.

Note: Option fees are capped at 12.5% of the option value.

Types of Options Available

The options on the Bit.com platform are separated into coin-margined and USD-margined options. USD-margined options are settled in USD, while coin-margined options are settled in the coin of the underlying option asset.

The supported assets for each category are below.

Coin-Margined:

  • BTC
  • ETH
  • BCH

USD-Margined:

  • BTC

Strike Prices

The Bit.com platform lists a set of predetermined strike prices and expiration dates that users can pick from. For BTC options, the strike prices are in increments of $1,000, while for ETH options, the strike prices are in $50 increments.

Trading Crypto Options

Expiration Times

Traders can choose from the following expiration dates:

  • Daily
  • Weekly
  • Monthly
  • Quarterly

Once an option expires, if it’s "in the money" (profitable), the platform will exercise it automatically and credit the option buyer with the realized option value.

Max Leverage

Up to 50x.

How Does Settlement Work?

Traders can choose between settlements in USD, which are available only for BTC trades, or settlements in the underlying coin, which are available for BTC, ETH, and BCH options.

How to Use Bit.com For Trading Crypto Options

Step 1: Go to https://www.bit.com/ and Log In or Sign Up.

Trading crypto options on bit.com

Step 2: When logged in. Click on an entry in the Call or Put table to open the trading menu.

Trading crypto options of bit.com

Step 3: Select the size of the option you want to trade and its underlying asset. Click Buy or Sell to proceed.

Trading crypto options on bit.com

Step 4: Verify the details and click confirm to complete the trade.

Trading crypto options on bit.com

OKX

Trading crypto options on OKX
Assets SupportedFeesMinimum Order Size
OKXBTC, ETH, SOLMaker fees: Starting at 0.02% of the underlying asset value Taker fees: Starting at 0.03% of the underlying asset value Options exercise fee: 0.02% (daily options excluded)BTC options: 0.01 BTC ETH options: 0.1 ETH SOL options: 1 SOL

OKX is a Hong Kong-based exchange that touts its low trading fees, a wide range of supported assets, and an extensive list of spot and derivatives trading tools.

Pros

  • Very low fees
  • Strike prices are in small increments, so more fine-tuned trades are possible
  • Wide selection of option lengths, including bi-daily, bi-weekly, and bi-quarterly

Cons

  • Not available in the US
  • Documentation is scattered and scarce
  • Option trades cannot be settled in USD

Trading Crypto Options on OKX

OKX supports options trading for BTC, ETH, and SOL on a trading schedule that involves a wide range of expiration windows and strike prices. The platform features low fees starting at 0.02% for makers and 0.03% for takers and going even lower depending on trading volume.

OKX settles all option trades in the cryptocurrency of the underlying option asset.

Fees

The OKX platform charges maker and taker fees for traders who add liquidity to the exchange and those who take liquidity, respectively. Maker fees start at 0.02%, and taker fees start at 0.03% and go down depending on monthly trading volume, total assets held, and how much OKB coin you have.

The fee tier structure is below:

Trading crypto options

Note: Option fees on OKX are capped at 12.5%.

Types of Options Available

Call and put options are available for:

  • BTC
  • ETH
  • SOL

Strike Prices

The OKX platform provides strike prices in the following increments:

  • For BTC: Increments of $100
  • For ETH: Increments of $10
  • For SOL: Increments of $0.50

Expiration Times

The OKX exchange maintains options with the following expiration dates:

  • Daily
  • Bi-daily
  • Weekly
  • Bi-weekly
  • Tri-weekly
  • Monthly
  • Bi-monthly
  • Quarterly
  • Bi-quarterly

Max Leverage

Up to 100x.

How Does Settlement Work?

All options are settled in the coin of the option’s underlying asset. BTC options are settled in BTC, ETH options in ETH, and SOL options in SOL.

How to Use OKX For Trading Crypto Options

Step 1: Head to https://www.okx.com/ and Log In or Sign Up.

Trading crypto options on okx

Step 2: Navigate to the Trade > Contracts & margin trading from the top menu.

Trading crypto options on okx

Step 3: Select the asset for which you want to buy an option at the top left corner.

Trading crypto options on okx

Step 4: Click on any of the assets, and you’ll see a list of recommended trades. Scroll down to Simple Options Trading for the asset you pick and click on it.

Trading crypto options on okx

Step 5: Choose the direction for your option. You’re either betting the asset will rise (Call) or will fall (Put).

Trading crypto options

Step 6: Choose the target price for your option.

Trading crypto options

Step 7: Click Buy next to the price you choose.

Trading crypto options

Step 8: Enter the amount you want to buy and click Confirm.

Trading crypto options

Crypto Options Trading vs. Traditional Options Trading

Crypto options work much like traditional options for trading stocks. There are some notable differences, however.

Price Volatility RiskTrading OpenExchanges
Traditional OptionsLowerLowerMonday through Friday, 9:30 a.m. to 4:00 p.m. Eastern Standard TimeUsually focus just on traditional options
Crypto OptionsHighHigher24/7Usually focus just on crypto options

Why Trade Crypto Options?

There are a variety of reasons to trade crypto options. These range from opportunistic speculation to risk management.

  • Price Speculation: Trading options is generally used to make leveraged bets on the price of an asset like BTC or ETH. For example, if you buy a BTC call option for $1,000, the option will appreciate in step with the appreciation of Bitcoin. So if BTC appreciates $5,000, your option value will also go up by $5,000. This represents leveraged price exposure. Generally, buying calls is bullish price exposure, while buying puts is bearish price exposure. Beware of leveraged trading, however, as it can just as easily turn against you if the price of the underlying asset goes in the opposite direction.
  • Earn Passive Premiums: Selling options gives you an upfront premium that you can receive immediately. There are strategies such as selling covered calls that allow you to earn from premiums regardless of what direction the market moves in.
  • Hedging: If you are holding a basket of crypto assets and banking on them appreciating in the long run, it may be worth buying some put options as a hedge just in case the markets don’t go your way. Put options have been described as a form of portfolio insurance.
  • Earn Through Volatility: Each option has an “implied volatility” factor which is calculated using an option pricing model that takes into account its strike price, expiration date, and price premium. When volatility is high, options are expensive and when volatility is low, options are cheap. The implied volatility of an option can be used to value the option. If you believe that the implied volatility is low or cheap relative to the actual volatility of the underlying asset, you can buy the option and make the bet that volatility will increase. Selling options is betting that volatility will decrease.

Expert Tip:

Option’s provide traders the opportunity to benefit from more than just price speculation. As a trader you can use options to express a view on volatility or generate yield from the passage of time.
-Ryan Grace

Styles and Types of Options

While all crypto options are contracts for trading crypto in the future, there are specific options for the right to buy crypto in the future — known as “call” options — and others for the right to sell crypto in the future — known as “put” options.

In addition, there are two types of calls and puts — European and American. European call-and-put options require that the crypto be traded on the exact day that the contract expires, while American options allow trading at any point leading up to and during the day of the contract expiration.

  • Calls: Give you the ability to buy a cryptocurrency at some future date for a predetermined price.
  • Puts: Give you the ability to sell a cryptocurrency at some future date for a predetermined price.
  • European: Can only be exercised on the option’s expiration date.
  • American: Can be exercised any time before and/or on the option’s expiration date.

Below is a table describing what rights each type of option contract gives:

Call OptionPut Option
European You have the right to buy a cryptocurrency on an exact date.You have the right to sell a cryptocurrency on an exact date.
AmericanYou have the right to buy a cryptocurrency on any day leading up to and during an exact date.You have the right to sell a cryptocurrency on any day leading up to and during an exact date.

How Expiration Works

Since crypto options are agreements to potentially trade assets in the future, there must also be a date associated with these contracts for when these trades would take place. This date is called the contract “expiry” date. In European options, if the option is exercised, it must be exactly on the date of the contract expiry. In American options, contracts may be exercised before the expiry date.

For example: If you buy a European call option to buy Bitcoin at $20,000 with an expiry date on November 20th, you are allowed to purchase Bitcoin at a price of $20,000 on November 20th, regardless of what the price of Bitcoin is that day.

How Strike Prices Work

Options give the owner the right to trade crypto at a certain price at some point in the future. This price is known as the “strike price.” Call options allow you to purchase crypto at a certain strike price in the future, while put options allow you to sell crypto for a certain strike price in the future.

For example: If you buy a call option for Bitcoin with a strike price of $30,000 and an expiration date of December 25th, you are allowed to purchase Bitcoin for $30,000 — regardless of what the actual price of Bitcoin is on December 25th. Inversely, if you purchase a put option with a strike price of $30,000, you can sell Bitcoin for that price regardless of what Bitcoin is actually trading for.

Examples of Buying and Selling Calls

When you buy a call, you are buying the right, but not the obligation, to purchase an asset like Bitcoin for some price in the future. You pay a premium for this, so you start out at a loss but can make money if the price of Bitcoin at the expiration date is above the strike price + the option premium paid.

When you sell a call, you collect a premium upfront, meaning you start out profitable, but you are obligated to sell the asset, such as Bitcoin, on the expiry date if the buyer of the option decides to exercise it.

For example: If you sell a call option for Bitcoin with a strike price of $20,000, you earn a premium, but you are obligated to sell Bitcoin to the option buyer for $20,000. If the price of Bitcoin rises during the option’s lifetime, you will get a bad deal since you have an obligation to sell Bitcoin for a price that’s lower than what you could get if you sold it to the open market.

Examples of Buying and Selling Puts

When you buy a put, you are buying the right, but not the obligation, to sell an asset like Bitcoin for a predetermined price at some point in the future. You pay a premium here also, so you start out at a loss, and you make money if the market goes down in price.

When you sell a put, you collect a premium upfront, but you are obligated to buy the asset from the option holder if they decide to exercise the option.

For example: If you sell a put option for Bitcoin with a strike price of $20,000, you will earn a premium on it, but you are obligated to purchase Bitcoin from the option buyer for $20,000 regardless of how much Bitcoin trades for on the open market. If the price of Bitcoin falls significantly, this will be a bad deal for you since you are contractually obligated to buy Bitcoin for a higher price than what it’s trading for — resulting in a loss for you.

How Do You Make Money Trading Crypto Options?

Making money in trading crypto options is all dependent on being correct about where the crypto market will move in the future. Crypto options have an associated cost to them known as a “premium” that must be paid in order to purchase them. As a buyer, money is made when the option is traded (or exercised) for more than the option premium you paid. As a seller, money is made when the option expires out of the money or is closed for a lower price than initially sold for, before expiration.

Let’s look at some examples.

A Profitable Example

Let’s say you sell a Bitcoin put option with a strike price of $30,000 and an expiry date of August 21st. To start out, you collect a premium on this option, so you make some money immediately.

On August 21st, the price of Bitcoin has gone up to $34,000. The person who purchased the put option from you will not want to exercise it and sell their Bitcoin to you for $30,000 since they can sell it on the open market for $34,000.

In this case, the option will expire unused, and you will get to keep your collected premium without having to do any more trading, so you have profited from selling a put option.

A Losing Example

Let’s say you purchase a call option for Bitcoin with a strike price of $40,000 and an expiration date of October 9th. You start out at a loss since you pay a premium for the option.

On October 9th, the price of Bitcoin is down to $28,000. Your call option is worthless because it gives you the opportunity to buy Bitcoin at $40,000. That is not useful since you can buy Bitcoin for much cheaper now.

In this scenario, you do not exercise the option, and you lose money since you had to pay the option premium.

Tips For Choosing a Crypto Exchange For Trading Options

When picking a crypto exchange to trade options, there are several important factors to consider. While most traders are tempted to focus on fees and pick an exchange that charges the lowest fees, this may not always be an optimal strategy. You should also consider:

  • Options offered: Not all exchanges support the same crypto assets. While most support BTC and ETH, if you’re trading altcoins such as SOL or others, it’s important to make sure the exchange provides options for your coin of choice.
  • Fees: Every trade on a crypto exchange has associated costs. Some exchanges only charge transaction fees, while others charge option exercise fees, liquidation fees, and more.
  • KYC requirements: Know-Your-Customer, or KYC, is a process of identity verification that many exchanges are required to use by law. Most platforms will only allow you to trade options after you’ve provided them with documents to verify your identity.
  • Payment options: Some exchanges only support deposits in crypto, while others support deposits in fiat currency. Due to conversion and gas fees, it may be beneficial to consider what payment you will be using before picking an exchange.
  • Software integration: If you want to use an API to make trades, there are exchanges with varying support for automation. Consider this if you’re a more advanced trader.
  • Customer support: When dealing with a lot of money, you want to be sure that your selected exchange has your back. Some exchanges are known for having great customer service, while others are notorious for the opposite.

Trading Options Vocabulary

Option Terminology

  • In the money (ITM): Options are profitable when they are “in the money.” For a call, this means that the strike price of the option is below the underlying asset’s price — meaning you can make money by buying the asset for the strike price. For a put, this is when the strike price of the option is above the underlying asset’s price — meaning you can make money by selling the asset for the strike price.
  • At the money (ATM): Whenever the strike price of an option — call or put — is the same as the open-market trading value of the underlying asset, the option is considered “at the money.”
  • Out of the money (OTM): “Out of the money” is the opposite of “in the money,” meaning it’s when an option is not a good deal to exercise. This is when the strike price is higher than the underlying asset price for a call option and when it’s lower than the underlying asset price for a put option.
  • USD-denominated options: Crypto options can be settled either in the cryptocurrency of the underlying asset (for example, BTC or ETH) or in some USD or stablecoin denomination. Many platforms offer USD-denominated options by default.
  • Covered call: When selling a call option, the call is considered “covered” if you own the underlying asset. Selling covered calls can be a good strategy to earn option premiums without a lot of risk.
  • Uncovered call: You can sell a call option without having to actually own the underlying asset. This is a dangerous strategy since, if the buyer exercises the call option, you are obligated to purchase the asset at whatever price it is trading and sell it to them for the predetermined strike price.
  • Option margin: This is the asset that you must hold in your account in order to sell an option. For example, if you want to sell a BTC call option, the underlying BTC that you promise to sell to the buyer if the option is exercised is known as the option margin.
  • Unified margin: Many platforms will provide margin trading options that allow you to leverage your positions across all assets rather than just levering up on a single asset. This is known as unified margin.
  • Portfolio margin: In order to determine the margin required to sell an option, platforms may look at your portfolio margin, which is simply the risk profile of all your portfolio assets taken together. The lower this risk profile, the less margin is usually required.

The Greeks

  • Theta: Options are normally worth less as more time passes. Theta measures how much the price of the option is estimated to change given a 1 day passage of time, all else equal.
  • Delta: Delta is a measure of how much the price of an option is estimated to change given a change in the price of the underlying asset, all else equal.
  • Gamma: Gamma measures how much the delta of an option will change given a change in the price of the underlying asset. This measures the rate of change of delta, all else equal.
  • Vega: Vega measures how much the price of the option is expected to change given a 1% change in volatility, all else equal.

To Sum it Up

Trading options allows you to buy or sell an underlying asset for an agreed-upon price at some future point. This can be done to speculate on the future price or to hedge existing holdings. Most popular crypto exchanges provide support for options trading.

Frequently Asked Questions

  • Is options trading available for crypto?

  • Can you trade crypto options on Coinbase?

  • What is a good crypto options trading strategy?

  • Is there a crypto options trading app?

  • What is the best crypto options trading platform?

  • Do you have to pay taxes when trading crypto options?

  • Can I use crypto options for hedging?

  • Can I leverage trade with crypto options?

Contributors

  • Avatar of George Hristov

    George is a tech writer interested in web3 startups and communities. In the dynamic world of crypto, he stays plugged in to the day-to-day headlines, deep dives, and industry commentary.

  • Avatar of Shannon Ullman

    Shannon Ullman is a senior editor for DeFiRate.com. Shannon specializes in cryptocurrency and personal finance. Her work has appeared in publications like The Motley Fool and Insider.

  • Avatar of Ryan Grace

    Ryan GraceReviewer

    Ryan Grace is the Head of Digital Assets at tastytrade.com, a financial network that helps investors navigate the markets, and find actionable trade ideas.