- Options trading in crypto is a low-risk and low-cost way to trade and profit.
- The two ways in which options trading is done are American and European styles.
- The top options trading platforms are Premia Finance, FinNexus, Deribit, and Quedex.
Those who read and enjoy stories of financial success are often intrigued by options. Traders can potentially profit with options regardless of if the stock moves up or down at price. Options traders have the power to strategically mitigate losses or read big profits with a relatively small investment. However, the wrong move can lead to a big financial loss.
Options trading has also made its way into the crypto world. Virtual currency holders recognize the financial instrument can be a low-risk and low-cost way to trade crypto and profit. The crypto options market is also open 24/7 and is often more volatile than its traditional financial counterpart, opening up the potential for greater profits with smart trading.
Those who trade options understand there are two different types of options, a call (the right to buy the underlying asset), and a put (the right to sell).
However, crypto options traders should note they have two styles to choose from. American-style options mean the buyer can exercise the contract before the expiration date. With European-style options, the contract is only allowed to be exercised right when it expires.
Even though some find options trading confusing, they’ve still established a solid presence in the virtual currency world. While Lennix Lai, OKEx director of Financial Markets explains the industry is largely dominated by institutions, he believes 2021 will lead to more tailored options products ushering in more retail traders.
He notes OKEx has enjoyed 10x market growth from January 2020 (when the platform launched options trading) to March 2021.
A number of crypto options trading platforms have surged ahead of the pack and have proven popular with traders. Here’s a brief overview of four of the most prominent choices.
Crypto options trading only grows in popularity as more people become comfortable with the virtual currency industry and options in general. In mid-May, researcher Frederick Collins told CoinDesk how Bitcoin’s price downturn at the time was likely aggravated by options market makers.
The activity was touted as an example of how the crypto options market is growing to the point where it can influence Bitcoin’s spot market.
Overall, the above options platforms are some of the most well-known in the space for those interested in diversifying their financial portfolios with crypto options.
This article was first published on coinquora.com