Bitcoin options – An introduction
Options are a type of financial derivatives, whose value is derived from other underlying assets. The underlying asset could be cryptocurrencies, stocks, interest rate, commodities etc.
Specifically, an option is an agreement between two parties that gives the buyer of the option the right to trade an underlying asset at an agreed price on an agreed date. For options, there will always be two parties involved — “Buyer” and “Seller”.
The buyer pays the seller a non-refundable premium at the start of the contract.
The buyer can choose not to use the option if it’s not in his favor.
The seller is required to fulfill the terms of the contract if the buyer exercises his rights.
Types of options
In all option contracts, the seller is required to fulfill the terms of the contract (obligation to sell or buy) as he was paid a premium already.
Benefits of options
As one of the most flexible derivative instruments, options can help to boost and protect your volatile crypto portfolio. Here are some benefits.
1. Enjoy limited risks and potentially unlimited returns
2. Earn income even in sideways markets
3. Versatile trading tool; trade multiple strategies
Depending on your risk appetite, you can engage in different options strategies to boost or protect your portfolio.
Learn more about options here:
- Boosting your trades with crypto options
- Make your crypto assets work for you — Sell options for weekly income
- Buy crypto options to enjoy leveraged returns
- 3 smart ways to bet on the upcoming bitcoin halvening with options
Join us on Telegram to chat crypto and options!
The information provided here is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other professional to determine what may be best for your individual needs.Sparrow does not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence.To the maximum extent permitted by law, Sparrow disclaims any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses. Content contained on or made available through any of our communication channels is not intended to and does not constitute legal advice or investment advice and no attorney-client relationship is formed. Your use of the information on any of our communication channels is at your own risk.