Crypto options differ from traditional options, in that they are derivative instruments that provide the ability to trade on the price fluctuations of the underlying crypto asset without the necessity of actually owning the crypto asset itself. When trading crypto options, you’ll be gaining or losing the difference between the opening and closing price of the position, depending on where it was trading when the crypto option contract was activated.
StormGain gives you the power to trade crypto options on a variety of different crypto assets. The crypto assets that can be traded as options can be found in the platform’s Options section, listed as a subsection of the specific crypto asset. Here you will find the different types of options contracts, such as calls and puts, along with expiry dates and strike prices.
For example, below you can see Call and Put options on Bitcoin, expiring in November with strike prices ranging from 19,100 to 19,400.
The key difference between crypto options as derivatives here and traditional, physical options, is that with crypto options, you will not be able to buy the underlying asset at the specified price before expiry. Rather, you’re solely trading the price fluctuations of the underlying asset.
Crypto options vs traditional options
Now that we’ve covered the basics on crypto options, let’s go over some of the basics about traditional options to help you trade even more confidently. Traditional options are derivative financial instruments whose value is determined by the underlying asset, such as a stock, commodity, or equity index. They provide traders the option, but not the requirement, to buy or sell a specified amount of the underlying asset at the price it was trading at when the contract was initiated. Because this is not a requirement, they do not oblige the trader to buy or sell, which allows for greater flexibility.
What determines the price of Crypto options
Without spending hours going into excessive details and financial formulas, it’s enough to say that the following key points determine the value of crypto options:
Now that you understand the basics, let’s jump into the reasons why trading crypto options may be right for you.