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Crypto options trading is an exciting new way to profit in cryptocurrency markets. It’s a form of derivative trading that allows crypto traders to speculate on the future price of cryptocurrencies without owning the asset. It requires a complex, strategic approach to succeed.
Though crypto options trading can yield profits, it’s not a well-known or accessible strategy. Because of this, crypto traders are missing out on opportunities to profit in the crypto market.
This article will solve that issue by giving you a comprehensive guide to crypto options trading and explaining crucial tools to help you automate your crypto trading process.
What is Crypto Options Trading?
Crypto options trading is a type of financial derivative that allows crypto traders to speculate on the future price of cryptocurrencies, such as Bitcoin or Ethereum. With crypto options trading, traders can buy or sell the right (but not the obligation) to buy or sell crypto at a predetermined price on a specific date.
Crypto options trading is a high-risk investment, and premiums on options contracts are incredibly volatile. While you can profit from crypto options trading, doing so requires expert strategy and a high potential for loss. The strategy is challenging to execute, especially for an individual investor. Many people turn to crypto trading platforms that can automate this strategy, such as Haru Invest, to improve their chances of profiting from options trading.
Crypto options trading involves the trader making investments based on a predetermined future price. The strategy is separated into call options and put options, described below.
You can automate crypto trading with Haru Invest
Enjoy the highest earning rates in the market with top performing trading strategies.
You can automate crypto trading with Haru Invest
Enjoy the highest earning rates in the market with top performing trading strategies.
Call options
These options are tied to an asset, and the buyer pays a premium for a contract giving them the right to purchase the asset at a set price any time before the contract expires. However, the buyer is not obligated to execute the option and might also consider selling the contract as an alternative.
Put options
These options are also tied to an asset and require a paid premium. This premium gives the buyer the right to sell the asset at the set price, or “strike price.” Buyers can execute the contract at any time before it expires. If the asset’s price decreases significantly, the buyer can sell their put options to profit. The buyer is not obligated to execute the contract.
How Do Crypto Options Trading Work?
Traders agree with another party (the “counterparty”) to buy or sell a crypto asset at a predetermined price (the “strike price”) on a specific future date (the “expiration date”). The trader pays a premium to agree.
The counterparty pays the difference between the strike price and the cryptocurrency’s market price on the expiration date. The trader receives a payout if the cryptocurrency’s market price is lower than the strike price. The counterparty receives a payout if the market price exceeds the strike price.
There are two styles of crypto options: American options, which can be exercised before the expiration date, and European options, which can only be exercised on the specified settlement date.
If you’re questioning whether you can trade crypto options, the answer is yes–you can trade crypto options through various online brokers. You’ll need to open an account with a broker that offers crypto options trading and deposit funds into your account before you can begin crypto options trading. USA investors will find multiple solutions available for platforms to trade crypto options.
Differences Between Crypto Options And Futures Trading
Crypto options trading differs from futures trading in that an options contract gives the investor the right–but not the obligation–to buy or sell a crypto asset at a specified price before the contract expires.
A futures contract, however, requires the buyer to purchase an asset’s underlying security or commodity from a seller on a specific date to earn a profit, provided that the holder’s position is not closed earlier. With futures market trading, traders essentially set a purchase price and make a purchase when the price of a crypto asset on an exchange hits the prior specified price.
Differences Between Crypto Options Trading and Traditional Options Trading
Crypto options trading also differs from traditional options trading in that it takes place on a decentralized exchange in a market that operates 24/7. Traditional options training is limited to specific market hours, Monday through Friday. While constant access to the crypto market is a bonus, crypto markets tend to be more volatile than traditional markets, and prices fluctuate frequently.
Crypto Options Trading Platforms
There are numerous platforms for crypto options trading available for traders looking to access a wide range of crypto options, from Bitcoin to Ethereum and Solana. Below are some top crypto options trading platforms to consider if you hope to invest in this strategy.
Binance
Binance is one of the largest crypto exchange platforms in the world for daily trading volumes of crypto. In 2022, Binance had the largest trade volume worldwide, with a 24-hour volume of $16.91 billion USD. You can trade crypto options for BTC-USDT, ETH-USDT, and BNB-USDT with Binance.
ByBit
ByBit is another popular crypto derivatives exchange platform that offers traders a platform to access a matching engine, online spot and derivatives trading services, and API support. This platform allows users to trade various options from a single account and offers margin and futures trading, allowing traders to leverage their positions and increase their profits. You can trade crypto options for BTC, ETH and Solana with ByBit.
OKX
OKX is a leading crypto options and derivatives exchange platform. The platform is not available for US-based investors; however, it remains one of the top crypto exchanges and users can trade crypto options for Bitcoin and Ethereum with OKX.
Let Haru Invest Automate Whole Process for You
Crypto options trading can pay off when executed correctly–however, it is a high-risk strategy and often too complex for individual investors. Rather than attempt this complicated strategy solo, use automated crypto trading platforms like Haru Invest.
Haru Invest uses highly optimized strategies to help investors execute successful trades while automating the entire process.
Haru Invest is a service that automates crypto trading to help investors succeed at complex strategies. The platform offers various products to help traders succeed in the crypto market.
Visit the Haru Earn Explore page for more information.
