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Author: Admin | 2025-04-28
Market.BTC options open interest. Source: theblock.coCalls and putsThere are two types of options contracts, call options and put options. Call options give the holder the right to buy an underlying asset at a set date (expiry), and put options give the holder the right to sell it. Each option, depending on associated conditions, has a market price, called the premium.Options contracts also come in two forms: American and European. An American option can be exercised — meaning the holder buys or sells — at any time before the expiry date, while a European option can only be exercised on the expiry date. OKX supports European options.Owning an option means that if the holder decides not to exercise their right to buy or sell on the expiry date, the contract simply lapses. The holder doesn’t have to make good on it, but they do lose the premium — the price they paid for the contract. Options are also cash-settled for convenience, but carry very different risks compared to futures. With futures, either party’s risk and reward is unlimited (Bitcoin’s price can go anywhere before settlement). But with options, buyers have unlimited potential gains and limited loss, whereas option sellers have unlimited potential loss and very limited gain (as explained below).How does a Bitcoin options contract work?If Bitcoin is trading at $10,000 today, and, this time, Robbie believes the price will be higher at a certain date in the future (let’s say a month later), he can buy a call option. Robbie’s call option has a strike price (the price at which BTC can be bought in the future) of $10,000 or lower.If a month later Bitcoin is trading at $15,000, Robbie can exercise his call option and buy Bitcoin for $10,000 and make an instant gain. On the other hand, if
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