BitOffer: BTC Options, the Weathervane in the Wave of Bitcoin Derivatives
In the past half of the year, several major cryptocurrency exchanges launched bitcoin options successively. Since an increasing number of institutions have participated in the bitcoin trading market, the bitcoin market starts being traditionally financialized. Obviously, the fact that several major cryptocurrency exchanges launched bitcoin options indicated that bitcoin options would be the new weathervane of the bitcoin market. At the same time, a new competitive landscape is forming on the bitcoin derivatives market.
Actually, in the traditional financial market, the trading volume of derivatives presents a huge number, which is 10 times more than the spot trading market. Although the trading volume of options trading on the cryptocurrency market is much lower than its cryptocurrency market due to the options trading is new to the cryptocurrency, options trading still has some exclusive advantages. Firstly, it is much more suitable for the demands of investors. In addition, the applicability of options trading is more diversified. And its high based leverage allows investors to own a considerable profit while a low risk accompanies, which leads to the consequences of unlimited profit, but the largest loss would only be the options premium.
Last October, BitOffer officially launched BTC Options which request 0 margins and 0 fees. Moreover, it allows investors to earn profits up to 2,000X leverage without exercising. The most significant feature is that no matter the bull market or bear market, investors own the opportunity to earn thousands leverage profits without being fear of liquidation. The purpose of BTC Options launched is to provide investors an accurate hedge tool and an additional trading product. With the spot index calculated based on the real-time transaction price and the weight ratio of the seven major exchanges, BTC Options is assuredly transparent and fair.
How do investors trade BTC Options?
To trade BTC Options, it is quite similar to the spot trading. It also requires investors to predict the bitcoin price in the future, but BTC Options supports investors to buy long or short: Buy call when you expect the bitcoin price to rise, buy put when you expect it to drop. And the earnings are calculated in the same way: When you buy a call, your profit will be the amount of the increase of the bitcoin price; When you buy a put, your profit will be the amount of its decrease.
When investors place orders, they need to select the time length of the options contracts: 7-days, 1-day, 12-hours, 4-hours, 1-hour, 5-mins and 2-mins.
For example, now the bitcoin price is $7,500, after predicting that the bitcoin price will drop in an hour, then you buy a 1-hour put options contract with $10.
After then, the bitcoin price drops from $7,500 to $7,000 in an hour, your profit will be $7,500-$7,000=$500 when the contract settled in an hour. And if the bitcoin price increases in an hour, then you would only be the premium of the options contract ($10). The above I listed is the advantage “Unlimited Profit But Limited Loss” of options trading.
What are the differences between BTC Options and futures?
Bitcoin Options and bitcoin futures are essentially bitcoin derivatives, which can both used for hedging the risk of spot trading. But futures is definitely much riskier than options because futures trading request margins, and any carelessness can cause investors to be forced into liquidation. However, options trading is simple because of its features of “No Margins”, “No Fees” and “No Liquidation”.
Let me list an example to prove the differences above:
When the bitcoin price rises from $7,000 to $7,700, the change is 10%.
Futures: Open Long 20X BTC, when the change is 10%, the profit ratio will be 200%;
Options: Buy a call options contract with $10, the bitcoin price rises by $7,00, the profit ratio will be 7,000%.
What if the change of the bitcoin price is -10%?
Futures: Be forced into liquidation. (When the change is -5%, the account is already forced into liquidation without adding margins)
Options: The largest loss is the premium of the options contract ($10). (BitOffer BTC Options does not request investors to exercise the options contract)
After the comparison, Options trading is much profitable but with a lower risk than the futures trading. Options trading, as a financial derivative on the traditional financial field with a long history, is destined to become the direction of the bitcoin market developing which presents the whole trading market improved.