The crypto industry continues to grow as exciting and innovative initiatives are relentlessly storming the space to hasten its reach to mainstream appeal. Firms and exchanges within the space are seen coming up with new innovations and trading instruments to help crypto users to easily optimize trading opportunities.
In a bid to provide cryptocurrency users with an exclusive trading experience, renowned cryptocurrency exchanges like Binance are developing new features to offer traders and investors access to a much broader range of instruments such as crypto futures trading, crypto options trading, and lots more.
Crypto options are derivative contract-based trading instruments that provide crypto users with the right to buy or sell an asset at a determined price and date. They serve as an avenue for crypto traders to either get leveraged exposure to the underlying asset, or to hedge risk. Crypto options can be exercised via either the “call” or “put” options. The “call” option gives traders the right to buy an underlying asset. Meanwhile, the “put” option gives users the right to sell an underlying asset.
With crypto options, crypto traders have the opportunity to generate profit by correctly predicting the future price of the underlying crypto. With that in mind, let’s learn more about Binance’s Options offering.
Binance is one of the notable crypto trading platforms, seeking to make crypto derivatives trading easily accessible to everyone. To that end, the exchange enhanced its crypto options trading offers after it launched a new Binance Options trading platform in September, 2022.
Binance Options allows users to make forecasts of crypto prices and leverage price alterations on the platform. It gives Binance users the right, but not the obligation, to purchase an underlying asset at a specified time and price. The debut of the new platform was triggered by Binance’s concern to clarify misconceptions about options trading being misunderstood as complex or “only for the professionals”. The revamped platform represents a measure deployed by Binance to simplify Options Trading with its intuitive user interface.
The Binance Options trading platform has been designed to allow traders to take a directional view of the market to help them predict market prices, while allowing them to protect their portfolios against volatility by hedging their bets. Currently, the platform supports European-style options exclusively.
The platform offers crypto options trading for BTC, ETH, and BNB at the time of writing. The featured assets are priced and settled in USDT, which makes it easy for traders to calculate their profits and losses.
Binance Options Pros:
- One of the lowest options fees in the market
- Ability to leverage market volatility for profit
- Requires relatively low capital investment to amplify trades
- It simplifies calculation processes as assets are priced and settled in USDT
- Binance Options offers users a wide range of options contracts
Binance Options Cons:
- Options contracts are limited to BTC, ETH, and BNB.
- Despite Binance’s best efforts, the platform is still a bit inaccessible to newcomers
What is the difference between options and futures?
Both options and futures are contract-based trading instruments that derive their value from underlying assets (hence the name, “derivative contracts”).
There are two critical differences between the two instruments. Options buyer has the right, but not the obligation, to buy or sell (depending on the options contract) an asset at a predetermined price and time.
Meanwhile, a futures contract obligates the holder to buy a certain asset at a predetermined time, and obligates the seller to sell and deliver that asset.
We’ve listed additional differences between the two assets in the table below, for greater accessibility:
|Obligation||Buyer and seller are obligated to perform the contract||Seller is the only one obligated, buyer has the “option”|
|Premium||No premium||Seller receives a premium from buyer|
|Risk||Whole spectrum (capped with liquidation)||Up to the premium paid|
|Expiry Date||Asset needs to bought/sold at a predetermined date||Asset can be bought/sold before the expiration date|
How to trade Binance Options?
Since Binance has launched its options trading platform, let’s learn how to trade options on the Binance Options platform via the following simple steps.
Step 1: Register or Sign In (if you’re an existing user)
The first thing to bear in mind is that you must be a registered user of Binance and must have completed the required Identification Verification process before you can use the options trading features.
Existing users and new users who have successfully completed the registration process can proceed to log in to the platform via the Binance app or web. Click on “Options” in Binance’s navigation menu to access the options services.
Step 2: Open Options Account to use the Binance Options Platform
To access the Binance Options platform, users are required to open an options account with Binance. You can proceed to read and get acquainted with the Binance Options Service Agreement to avoid trade complications. Click on “Register now” on the displayed dashboard.
Step 3: Add funds to your Options Wallet
Users are required to transfer some funds to their Option Wallet before they can start trading. Hence, click “Transfer” to add funds to your Options Wallet. Note: Transfers between internal wallets are free on Binance.
Step 4: Choose your preferred trade option (Call or Put)
After funding your options wallet, you’ll need to choose between the call option or the put option. As explained earlier, the “Call” option gives traders the right to buy an underlying asset. Meanwhile, the “Put” option gives users the right to sell an underlying asset.
This process will enable the Trading Panel. To check for more market details, you can click on the arrow or click on the candlestick symbol to switch the trading interface.
Step 5: Open a Position
After choosing your preferred trade option, select “OrderType” and then input “Price” and “Amount” in the required column. Then you can proceed to click “Buy“.
Step 6: Close the Position
While closing the position, you can choose to hold until expiration. Alternatively, you can also Switch to “Close” mode in the Trading Panel, select “Order Type“, input “Price” and “Amount“, and click on “Sell“. On the other hand, you can also click “Close” directly under “Positions“.
Binance has launched an exclusive promotion offer to celebrate the new Binance Options trading platform. While the promo tends to expose the options product to a wider range of audience, Binance will be using the opportunity to offer exclusive referral benefits for Binance Affiliates who refer their friends to Binance Options as well.
Following the exclusive promotion for Binance options, Affiliates will have the opportunity to earn up to 30% commission on the trading fees that their referrals pay on the Binance Options platform. The exclusive Binance Options promotion has been scheduled to run from the 3rd of October till an unspecified future date.
Furthermore, users who trade on the Binance Options platform within the period of October 3rd to December 31st, will be considered eligible to enjoy 30% rebates on their Options trading fees. The platform has noted that the trading fee rebates will not be available for Daily Options traders. Also, Binance Affiliates will not be offered trading fee commission from Daily Options trades.
Binance has been a reliable service provider that enables easy access to crypto derivatives trading. With its new Binance Options Trading Platform, the platform has provided users with an exclusive options trading experience. This presents it as a well-designed options trading platform that provides a useful alternative to popular types of crypto derivatives, such as perpetuals contracts.
Binance Options has become the choice of many, considering the exclusive benefits featured on its crypto options trading services. The platform offers users an opportunity to enjoy competitive fees and low liquidity while trading crypto options. In addition, the exclusive Options-focused promotion makes options trading on Binance that much more lucrative.
It is important to understand that options trading may expose you to a significant amount of risk, especially if underlying assets are cryptocurrencies, which are generally more prone to volatility than stock, for instance. Users who intend to trade crypto options are encouraged to conduct proper and effective research and get a clear understanding before proceeding.
Hopefully, this article helped you understand better what Binance Options is, and how you can trade crypto options on Binance.
David is a crypto enthusiast and an expert in personal finance. He has created numerous publications for different platforms. He loves to explore new things, and that’s how he discovered blockchain in the first place.