Wouldn’t it be amazing if you could fix the price of buying or selling your crypto money? That is what options trading is, in simple layman language. And putting it a bit technically, options allow you to hedge partial risks and take maximum advantage of the much more volatile crypto market.
What exactly is Options Trading
Option trading means either of these two: the seller fixes the price for a sale to be made at some future date (put option), or the buyer fixes the price for the purchase to be made at some future date (call option). However, there is an associated price involved for buying an option. A number of factors drive this price, like the strike price, the current price, the volatility, the time to expiry etc.
What is the Action Principle
Let me explain this with an example:
Let’s say, if you decide to go for the call option, that means you decide to buy some cryptocurrency on some future date, fixing the price today. You pay some price to buy that option. So now, at the expected date, if you decide not to buy the cryptocurrency, you lose only a fixed amount that you paid as option price, so that means your risks are calculated. Note that you may decide not to buy the cryptocurrency if the current price is the same or less than the strike price obviously.
Let us analyze this scenario from the seller’s point of view, or the put option. If the price remains the same, or drops, the buyer probably won’t buy and the seller would earn the money that you spent as an option fee. He has his cryptocurrency intact with him which he can again pledge. And if the price rises, 33.333% probability as per statistics, he will be bound to sell the currency, but he would have still made some profit, comparing the selling price to his own cost price, rather than the current market price. So it is a win-win situation.
Why Option the Options Trading
By now you know that cryptocurrency is a market that is highly volatile. And this makes it difficult not only for the new players, but for the ones well dried in the sun too! If you are hesitant to venture into this, start with this safer options trading method. Options trading provides a way to minimize risks. Also, as cryptocurrency requires larger investments, so are the risks. Options trading acts as a seamless transition from very big risks to calculated maximum losses that can occur. The best part is, you do not have to buy or sell, you just have to procure your right to buy or sell with crypto options trading.
The Best Option
Now cryptocurrency is not like stock that it is uniform everywhere. So a great platform helps to manifold the profits. And when it comes to options for trading with cryptocurrency, try executium.com. It has a large base of buyers and sellers, it is one of its kind, with very fast transactions and the best possible rates for a deal. It works along - with top exchanges like Kraken and Bitmex - and at the same time treats you like a baby, especially if you are new to cryptocurrency.