The investment In Bitcoin world runs on only one fuel, profit. This is why investors are looking for ways to earn high returns without taking huge risks. Options trading has been gaining a lot of credibility recently because of how it helps burn this investment fuel. Dating back to the 17th century, Bitcoin options fall under the crypto derivatives class. Unlike the spot market, crypto derivatives allow you to bet indirectly on different cryptocurrencies.
Bitcoin options are an excellent way to take advantage of sudden changes in Bitcoin prices, profit from speculation, and generate income. But there is certainly a lot to learn about what Bitcoin options chains are, and how to trade Bitcoin options. Without further ado, let’s go over the things you should consider before investing in Bitcoin Options Chain!
What Is a Bitcoin Options Contract?
Since crypto, like BTC, is one of the most volatile investment assets, Bitcoin options allow people to invest in the asset without taking huge risks. Option trading provides an opportunity for investors to speculate whether the asset will show an upward or downward trend in the price movement chart.
The Bitcoin Options Chain is a concept that makes it easier for investors to make decisions. In technical terms, Bitcoin options are contracts that give investors the right to buy or sell BTC at a specified price and date in the future without any obligation. This means that investors can bet on the future price movement of Bitcoin according to their intuition and earn a profit on the speculation.
Bitcoin options trading and its difference from traditional crypto trading
Traditional crypto trading and options trading is largely different. The traditional method of spot market crypto trading relies entirely on buying and selling assets and then trading them at a higher price to make a profit.
When you trade a Bitcoin options chain, you don’t buy the crypto itself and instead trade your speculation about its price positions at a given time in the future. One of the biggest advantages of the bitcoin options chain is that you also have the option to bet your money on the downward trend of the BTC price, something you cannot do in traditional crypto trading.
BTC Options Trading Strategy
Here are some strategies you can apply when dealing with Bitcoin options:
Hedging
When thinking about making a profit through BTC options, hedging is one of the best strategies to pursue. Suppose the market predicts that the value of BTCÂ will drop significantly. Bitcoin options provide investors with the advantage of hedging an asset and locking in an investment. This means you can choose a value for which the Bitcoin you hold can be traded for money before it runs out of value.
Price Speculation
Another effective way to make money through options trading is to invest based on smart price speculation. Suppose you get an intuition after proper research that Bitcoin’s fundamental low will soon be broken. Price speculation can be used to the investor’s advantage because they have bitcoin options where they can choose the expiration date. If the assumptions prove to be true, they will serve as a great way to earn immediate profits.
Bitcoin Call Options
BTC call options are becoming more popular nowadays because of the ease of trading it allows users. This is a contract where the investor agrees to pay a certain amount of BTC on a specific date. It is like agreeing to buy the land at a certain price on a specific date by paying a small fee upfront to the landowner. Call options allow customers to exercise their price speculation and earn a profit by paying only a small fee upfront to close the contract.
Bitcoin Put Options
Put options are commonly used by investors who feel that their investment will lose value. This is a contract that allows the owner to sell BTC at a specified price at a later date, even if the asset has fallen in value.
Result
BTC options are becoming popular among traders and investors as it offers higher returns with lower risks, especially compared to spot trading of crypto.
Delta Exchange is India’s most trusted platform for crypto derivatives. At Delta, we bring the best liquidity, and our options book is the widest in the industry! Moreover, we also provide leverage up to 100x to give you a great trading experience in crypto derivatives!
We wish you the best of luck in your Options Chain investment
