Buying a crypto option contract
[The explanation assumes you are the buyer of the option]
Buying an option lets you potentially enjoy unlimited profits, while limiting your risk to the non-refundable premium paid upfront (Premium Payable). When you buy an option, you pay the Premium Payable for the right to trade an underlying asset such as Bitcoin (BTC) and Ethereum (ETH) at your set price (Strike Price) on your set date (Settlement Date). If options settle Out-The-Money on the Settlement Date, the rights return to the Seller.
Why are premiums paid in SP$?
SP$, as the settlement token in Sparrow, helps in simplifying and standardizing the trade settlement process for greater liquidity despite the customized nature of the contracts. Traders can easily value and make better decisions across Sparrow Option contracts.
Gives you the right to buy an underlying asset at the Strike Price on the Settlement Date. Buying a Call option implies that you believe the Settlement Price of the underlying asset would be greater than the Strike Price.
Gives you the right to sell an underlying asset at the Strike Price on the Settlement Date. Buying a Put option implies that you believe the Settlement Price of the underlying asset would be lesser than the Strike Price.
Learn more about
- Selling a Crypto Option Contract
– Selling Crypto Call Option (Sell Call)
– Selling Crypto Put Option (Sell Put)
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.