Among crypto’s rapid growth, options trading has emerged as a sophisticated strategy for those looking to leverage, hedge, or predict the price of cryptocurrencies. Unlike traditional spot markets, where traders can only buy and sell cryptocurrencies, options trading offers a unique approach to making gains or protecting against losses.
In this article, we’ll explore options trading in depth and spotlight some of the top platforms that offer options trading for cryptocurrencies. We’ll compare their features and fee structure so you can choose the platform that best suits your needs.
Understanding crypto options
Options are a derivative product that offers the right but not the obligation to buy or sell an asset before a specified date. Options allow traders to speculate on the future price movements of digital assets without owning them immediately. If the trader chooses to settle the option, it can be settled in cash or the actual cryptocurrency, depending on the terms of the contract.
Crypto options vs futures and traditional trading
With spot markets, traders can buy or sell cryptocurrencies instantly if their order conditions are met. However, futures and options are different types of derivative contracts that allow traders to speculate on the future price of cryptocurrencies without holding the underlying asset.
The main difference between options and futures is the delivery type. With futures, the trader is obligated to take delivery of the cryptocurrency at a fixed point in the future at the pre-determined price. However, with options, the trader has no such obligation. They can take delivery of the asset at a pre-determined price on or before the expiration date, but only if they choose to.
The second difference is the premium. With futures, no premium is paid upfront. However, for the right to trade an option, traders must pay a premium upfront. This amount is non-refundable regardless of the outcome, even if the trader decides not to exercise the option.
Types of crypto options
Options are typically divided into two types, with two separate delivery types also available.
Crypto option types:
Call options: Call options give the holder the right to buy the cryptocurrency at a predetermined price before the contract expires.
Put options: Put options give the holder the right to sell the cryptocurrency at a predetermined price before the contract expires. You can learn more about buying Put Options on OKX.
Crypto option delivery types:
European style: Options that can only be exercised at the time of the expiration date and not before. This is the most common delivery type supported on cryptocurrency exchanges.
American style: Options that can be exercised at any point before expiration, giving more flexibility.
Why trade crypto options?
Cryptocurrency options provide traders with several opportunities:
Leverage: Traders can take large positions with a small upfront fund, amplifying potential gains.
Risk management: Risk management is one of the most important use cases for crypto options. You can take a call or put option depending on your trade on other markets. For example, if you’re expecting BTC to go up and you’ve taken a long position, you can also purchase an appropriate amount of put options. If the price of BTC goes lower than your entry point, you can redeem your put options to cover the losses on your long trade.
Flexibility: Options let you freely trade in the market's direction, without holding the asset.
Diversification: Traders also choose options for diversification. Options provide exposure to the cryptocurrency market without holding the asset.
Best crypto options platforms
Read on for a helpful overview of some top platforms for trading crypto options today.
1. Deribit
Deribit is a crypto exchange that focuses on options trading. It has access to deep liquidity and supports a long list of cryptocurrencies beyond the leaders Bitcoin and Ethereum. Deribit currently has the largest share of the Bitcoin options market. On any given day, more than 85% of open interest in Bitcoin options flows through Deribit. This makes the platform a good choice for experienced traders. However, the exchange doesn't cater much to beginners.
Option type: European style.
Cryptocurrencies supported for options: BTC, ETH, MATIC, SOL, and XRP.
Fees: The fee structure on Deribit is slightly complex. Both the maker fee and taker fee are 0.03% or 0.0003BTC/ETH, capped at 12.5% of the option’s value.
Settlement option: Settled with the underlying asset. Also, options are exercised automatically at expiry if a gain is made.
Minimum order size: 0.1 for BTC and 1 for ETH.
Expiration times: Daily, weekly, and monthly for BTC and ETH. Limited choices for other cryptocurrencies.
Pros:
Largest crypto options exchange with most liquidity for Bitcoin options.
The option is automatically settled if it is in profit at the time of expiry. In such instances, it doesn't require additional input from the trader to redeem them.
Supports more cryptocurrencies beyond BTC and ETH.
Cons:
High fees with a relatively complex fee structure.
2. OKX
As one of the most popular cryptocurrency exchanges, we offer a variety of ways to trade cryptocurrencies, including options. Our options product has been designed to offer a large selection of expiration windows and strike prices.
With low fees, good liquidity, and advanced risk management systems, OKX is a good choice for both beginners and experienced traders.
Option type: European style.
Cryptocurrencies supported for options: BTC and ETH.
Fees: Start at a 0.02% maker fee and a 0.03% taker fee.
Settlement option: Cash settled.
Minimum order size: 0.01 for BTC and 0.1 for ETH.
Expiration times: One, two, and three-times daily, weekly, monthly, and quarterly.
Pros:
User-friendly interface for beginners.
Advanced trading features for experienced traders.
Wide range of expiration times.
Low fees.
Cons:
Not available in the U.S..
3. Binance
Binance's options offering provides access to the leading assets by market cap as well as other cryptocurrencies such as BNB and DOGE. Meanwhile, Binance has “Easy Options,” which offers a simple interface that’s particularly helpful for beginners. Here, you simply choose the asset, direction, expiry price, and predicted price. You’re then given a list of options to choose from that fit your needs. However, liquidity on Binance options is low.
Option type: European style.
Cryptocurrencies supported for options: BTC, ETH, BNB, XRP, and DOGE.
Fees: 0.03% maker fee and taker fee.
Settlement option: Settled in USDT.
Minimum order size: 0.01 for ETH, BTC, BNB, and DOGE. 0.1 for XRP.
Expiration times: Daily, weekly, monthly, and quarterly options.
Pros:
Reasonable fees.
Minimum order size is low compared to competitors. Therefore, the capital requirement is low.
Settled in stablecoins, making trades easier.
Cons:
Low liquidity.
Options writing is available only for some users and liquidity providers.
Expiration times aren't consistent, which can negatively impact your trading strategy.
4. Delta Exchange
Delta is a crypto exchange that's well known for trading cryptocurrency options. It offers European-style options and is limited to Bitcoin and Ethereum. However, the platform goes beyond the so-called vanilla options offered by competing exchanges by offering option spreads and MOVE options.
Option spreads: They’re a combination of two options: one short and one long.
MOVE Options: Allows traders to speculate on the volatility of the asset.
Delta Exchange also offers its own Easy Options mode, catering to beginners wanting to get started with options trading.
Option type: European-style vanilla options, option spreads, and MOVE options.
Cryptocurrencies supported for options: BTC and ETH.
Fees: 0.03% maker and taker fee, with the fee capped at 10% of the premium on options. A settlement fee of 0.03% also applies.
Settlement option: Automatically settled at expiry.
Minimum order size: 0.001 BTC and 0.01 ETH.
Expiration times: Daily, weekly, monthly, and quarterly available.
Pros:
Additional options contracts such as option spreads and MOVE options.
Easy options make it extremely simple for beginners.
Cons:
Support for only BTC and ETH.
Fee could be high for some traders.
5. Bybit
Bybit is another cryptocurrency exchange that offers crypto options as a derivatives product. Traders can trade BTC, ETH, and SOL options with various expiry dates. Options are also settled in USDC, making trading convenient.
Option type: European style.
Cryptocurrencies supported for options: BTC, ETH, and SOL.
Fees: 0.02% maker and taker fee, capped at 12.5% of the option price. Additionally, there’s a 0.015% delivery fee.
Settlement option: Settled in USDC.
Minimum order size: 0.01 BTC and ETH.
Expiration times: Variable expiration times with limited choices for longer terms.
Pros:
Competitive fees.
Settled in USDC, making trading more convenient.
Cons:
Limited choices for expiration times.
Low liquidity.
How to choose a crypto options platform?
When choosing an options exchange, we recommend considering the following factors.
Cryptocurrencies supported: All exchanges support both BTC and ETH, but often there’s limited support for cryptocurrencies beyond these high-cap assets. So, if you want to trade a particular cryptocurrency, the first step is to check if the exchange you’re interested in supports it.
Options types: All exchanges have call and put options. However, only some exchanges support other option types like easy options, option spreads, and MOVE options.
Fees: Most exchanges have a complex fee structure that can quickly eat into your gains when volume and leverage are applied. It's essential to consider all the fees when choosing an options exchange.
Regional restrictions: Another fundamental element to check is whether the exchange you have your eye on can be accessed in your jurisdiction.
Expiration times: Most exchanges have options contracts that expire daily, weekly, and monthly. However, some exchanges offer a wider variety of expiration periods, giving you more choice.
Settlement options: Some exchanges settle in the underlying assets, and others settle in stablecoins like USDT and USDC. The options that offer stablecoin settlement are generally more convenient to calculate and trade on.
Minimum order size: Exchanges also differ regarding the order sizes. Make sure the exchange you choose has a minimum order size smaller than the minimum amount you want to trade.
Leverage: Exchanges offer up to 200x leverage. Consider such exchanges if you want greater leverage. Keep in mind that although high leverage can bring greater gains, it also brings extra risk of larger losses.
Customer support: Another key consideration is the customer support offered by an exchange. Always-on support across a variety of channels is preferable to make sure help is always there when you need it.
Risks and considerations
As with any form of trading, cryptocurrency options bring their own unique risks.
Volatility: Cryptocurrencies are volatile compared to most other asset classes. Although this volatility can result in large gains, it can also bring major losses when you trade options. Consider this volatility carefully as you also assess your risk appetite.
Complex: Options are a complex trading tool. That’s why some exchanges have simplified options products that cater to beginners. However, this form of trading always requires a firm understanding of the risks involved and careful risk management to navigate the complexities encountered.
Liquidity issues: Options are a relatively new product in the crypto market, meaning the liquidity is low compared to spot or futures markets.
The final word
Options is a form of crypto trading that presents new opportunities to gain exposure to the crypto market. This sophisticated trading strategy is relatively more complex than other forms of crypto trading, and therefore requires careful research and diligent risk management to give you the best chance of success. Success begins by choosing the best crypto options platform to suit your individual needs and experience level.
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