Cryptocurrency Options, Futures and Derivatives Trading

Last week Dimensions Network released its vision for the next revolution in cryptocurrency trading and investment. The days where exchanges just offer FIAT, BTC and ETH trading pairs are over.

Background

Dimensions Network was founded in 2017 with the goal of bringing Options, Futures and other Derivatives to the cryptocurrency market. Their roadmap includes:

  • High performance centralized trading platform with FIAT deposits & withdrawal
  • Liquidity Aggregator to allow cross exchange trading
  • Decentralized trading platform
  • Development of a real time currency

They will offer both a centralized and decentralized trading platform with interconnected liquidity pools

Options:

An option is a contract which gives the buyer (the owner or holder of the option) the right, but not the obligation, to buy or sell an underlying asset or instrument at a specific Strike Price on a specified date, depending on the type of the option.

Call Option — Gives the owner the right to buy at a specific price for a specific duration.

Put Option — Gives the owner the right to sell at a specific price for a specific duration.

Futures:

A Futures Contract is an agreement between two parties — a buyer and a seller — wherein the former agrees to purchase from the latter, a fixed amount of cryptocurrency at a specific time in the future for a pre-determined price. These details are agreed upon when the transaction takes place.

Unlike options contracts, there is an obligation on both the buyer and seller to execute the transaction at the appropriate time.

Why:

The appetite for regular cryptocurrency trading is known, and this is growing significantly as awareness grows in the general population, and among investment and trading professionals. The appetite for derivative and margin products is less clear, but will increase over time with investor sophistication.

Options and Futures are commonly used for:

Leverage: They help you profit from changes in prices without having to buy the underlying asset.

Hedging: To protect yourself from price fluctuations, by taking positions which can protect you from future fluctuations.

The key benefits of having a developed derivatives market are:

  • Price Discovery
  • Risk Management
  • Improve Market Efficiency
  • Reduce Transaction Cost

To find out more https://dimensions.network/en/