The most basic Bitcoin (BTC) options contracts involve buying a call which gives the holder the opportunity to acquire the asset at a fixed price on a set date. For this privilege, the buyer simply pays an upfront fee, known as a premium, to the contract seller.
Although this is a great way to use leverage while avoiding the liquidation risk that comes from trading futures contracts, it comes at a cost. The options premium will rise during volatile markets, causing the trade to require even further price appreciation to generate a reasonable profit, so the premium is a metric investors must keep a close eye on.