Options is essentially a kind of rights that enables the holder to buy or sells an asset at a fixed price at a specific date (or before the date). Just like the futures trading is a hedging tool for spot trading, so is options trading.
For example, when you plan to buy a house, dealers always offer discounts when you pay a deposit first. After then, when the value of the house drops sharply, you can choose not to buy the house, and your largest loss is the deposit. On the contrary, if the value of the house increases, then you would earn the price spread as profits. This is how options works and the deposit is the premium of the Options trading.
How to Trade Ethereum Options?
In some ways, Trading Ethereum Options is similar to trading ETH on the spot trading market. Both need investors to predict the Ethereum price in the future, but Options trading supports investor to long or short Ethereum: Buy call when you expect the Ethereum price to be bullish, but put when you expect the Ethereum price to be bearish. If investors buy call, investors would earn the price spread as profits when the Ethereum price rises; If investors buy put, investors would earn the price spread as profits when the Ethereum price drops. In short, investors will be able to earn a huge profit with a small budget in this way.
Take BitOffer Ethereum Options as an example, it requires 0 fees, 0 margins. The most significant feature of BitOffer Ethereum Options is its unlimited profit with limited risk. Whether the bull or bear market, investors are able to earn profits up to 1,000X. With the purpose of providing investors a precise hedge tool and an additional trading product, BitOffer Ethereum Options is also the only Ethereum Options that does not request investors to exercise the options contract when the contracts settled.
Now BitOffer Ethereum Options supports 7 different time lengths for investors to choose: 7-days, 1-day, 12-hours, 4-hours, 1-hour, 5-mins, 2-mins.
- Call Options:
For example, the ETH price now is $200, you predict that the ETH price will probably rise in a day, then you buy a 1-DAY call options contract with $3. After one day, the ETH price rises by $50 (from $200 to $250), when your 7-days call options contract settled, you will earn $50-$3=$47 as a net profit, of which rate of return reaches 1,500%.
- Put Options
For example, the ETH price now is $200, you predict that the ETH price will probably drop in a day, then you buy a 1-DAY put options contract with $3. After one day, the ETH price drops by $50 (from $200 to $150), when your 1-day put options contract settled, you will earn $50-$3=$47 as a net profit, of which rate of return reaches 1,500%.
If the direction of the contract you buy is wrong, you would lose the premium you pay to buy the options contract. Therefore, we can conclude that ETH Options is a trading with unlimited profit but limited risk. In other words, ETH Options requires a low budget but allows investors to earn a high profit with low risk. Thus, compared with ETH Futures, without the risk of liquidation, ETH Options is much more acceptable for most investors.