Crypto volatile again, Whats stopping you from trying Options Trading?

[vennali]

Here are some benefits of Options Trading, especially in a volatile market like Crypto:
Leverage and limit risks while getting higher potential returns - Option trading is very attractive for small pocket traders. By taking position in options, one can reduce the cost significantly.
For example,
It's Monday. BTC @ 10k
You buy a put for 1 BTC @ 9k expiring on Friday for $100
[if BTC falls below 9k, you can force someone to buy your BTC at 9k]
Wednesday, BTC flies up to 13k. You won't get stopped or liquidated. You are fine. Keep sipping your cocktails.
Thursday, BTC flies down to 7k. Still not your problem.
Friday, BTC settles at 8k at 4pm Singapore time.
Your profit is: 9k (strike price) - 8k (settlement price) - $100 (cost of premium) = $900
$900 profit from using $100. 9X return.

In the alternate scenario, BTC settles at 20k. Your maximum loss is still 100$.

Works in different market scenarios - One of the key advantages of options trading is the flexibility of changing strats as per different market conditions. There are various strategies for all kind of markets, whether bullish, bearish or sideways

You can hedge your trades to protect them from incurring losses.

Remember, shorting is a dangerous game, why not try options and limit your risks peacefully?  

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[vennali]

Here are some Strategies to Combat Crypto Market Volatility with Options Trading

[carter34]

Is hedging a trade minimizing losses or to hold your open positions on the opposite side. Hedging of market merely helps you to postpone the losing day because it is dangerous. Hence, at the long run, you see that you are losing when you take out one of the position.

[1Referee]

Crypto volatile again? Crypto (especially Bitcoin) has been experiencing a consistent volatility decline throughout the last couple of months.

I don't think most people know what options actually are, and when you don't know what they are and thus how they work (read, what the risks are), you shouldn't be getting into them. People have barely reached a point where they understand how you long/short on Bitmex. Perhaps a good idea for you (or someone else) to make a tutorial/guide so that people can get a clue of what options are?

[Herbert2020]

the only problem is that you wish for that kind of swing but what really happens is that you start at $10100 price then it only goes down to $9600 then comes back up to $10200 and jumps up and down in that area before it shoots back up again to $12k,.... prices.

all the while that you would be waiting and hoping to make a profit from a scenario that is highly unlikely and losing money for it, others (the day traders doing the normal routine) are making profit from each up and down inside that channel!
and that's what stopping people from "options trading".

[gettingrektallthetime]

Should have bought some puts yesterday, finally seeing some volatility in bitcoin 

[slashz9]

Here are some benefits of Options Trading, especially in a volatile market like Crypto:
Leverage and limit risks while getting higher potential returns - Option trading is very attractive for small pocket traders. By taking position in options, one can reduce the cost significantly.
For example,
It's Monday. BTC @ 10k
You buy a put for 1 BTC @ 9k expiring on Friday for $100
[if BTC falls below 9k, you can force someone to buy your BTC at 9k]
Wednesday, BTC flies up to 13k. You won't get stopped or liquidated. You are fine. Keep sipping your cocktails.
Thursday, BTC flies down to 7k. Still not your problem.
Friday, BTC settles at 8k at 4pm Singapore time.
Your profit is: 9k (strike price) - 8k (settlement price) - $100 (cost of premium) = $900
$900 profit from using $100. 9X return.

i think you should put guide or how to choose the correct option, if only said so difficult to understand.
maybe video or demonstration,will be better.

all the while that you would be waiting and hoping to make a profit from a scenario that is highly unlikely and losing money for it, others (the day traders doing the normal routine) are making profit from each up and down inside that channel!
and that's what stopping people from "options trading".

it depends, some people also do option trading, if that can make profit for them why not.
You might consider people trading from rising / falling prices to be more reasonable.
but there still a lot trading with option trading.

[silversurfer1958]

No, this type of leverage trading requires your account to be secured. If it exceeds the limit, your account will be burnt and everything will disappear. It's not as simple as you think, if making money is too easy, the whales were definitely involved in this type of transaction first. so I don't really like this kind of risky trade.

[logfiles]

Easier said than done.

Well volatility is good but i prefer following a bullish and bearish trend using Margin trading. For example yesterday through that drop, I managed to make 50% profit of my total portfolio value.
I decided to play it safe... Max Leverage was x25. I should have easily gone x50 if i was not being distracted with other things.

[davis196]

Thanks for explaining how options trading works.It might be useful for some newbie traders,but I already know how they work.The risk is less,but it's still there.If the bitcoin price collapses and the option expires,you lose the price paid for the option-$100.Not bad,but if you bought bitcoins directly,there's still a chance that bitcoin price might recover and you could get profit in the long term.
By the way,where are you trading bitcoin options?

[vennali]

Should have bought some puts yesterday, finally seeing some volatility in bitcoin 

Oh yeah, and I did! 

~snip~.

i think you should put guide or how to choose the correct option, if only said so difficult to understand.
maybe video or demonstration,will be better.

Yeah, We are working on an article/book to help the new users with the basics and common strategies. We already have a few introductory videos on youtube, if any doubts, You could join our telegram and feel free to ask them. Our community will be happy to help you understanding it.

all the while that you would be waiting and hoping to make a profit from a scenario that is highly unlikely and losing money for it, others (the day traders doing the normal routine) are making profit from each up and down inside that channel!
and that's what stopping people from "options trading".

I'll tell you a fact, Option strategies can be designed to profit from a wide variety of stock market outcomes. And that can be accomplished with limited risk. You should give it a try. I'm sure it will change your mind.

Warren Buffet has said, “If you’ve been playing poker for half an hour and you still don’t know who the patsy is, you’re the patsy.”
If you are actively trading and not using options, consider yourself the pasty in the market. Options offer significant advantages, if used properly, that overwhelmingly outweigh their drawbacks.

[vennali]

Thanks for explaining how options trading works.It might be useful for some newbie traders,but I already know how they work.The risk is less,but it's still there.If the bitcoin price collapses and the option expires,you lose the price paid for the option-$100.Not bad,but if you bought bitcoins directly,there's still a chance that bitcoin price might recover and you could get profit in the long term.
By the way,where are you trading bitcoin options?

Check out my Signature  . Sparrow Exchange. We have designed our UI in such a way, that even novice traders can understand and make a quick trade. You may need to register to be able to check the UI. If you just want a sneak peak, check out our medium channel. All the necessary links are in my signature. Cheers! 

[gettingrektallthetime]

Thanks for explaining how options trading works.It might be useful for some newbie traders,but I already know how they work.The risk is less,but it's still there.If the bitcoin price collapses and the option expires,you lose the price paid for the option-$100.Not bad,but if you bought bitcoins directly,there's still a chance that bitcoin price might recover and you could get profit in the long term.
By the way,where are you trading bitcoin options?

Hahaha i like your permabull thinking! that's why i rarely buy options, only when I think there may be significant movement, then I will make some trades. Otherwise i prefer selling options for premium, to me it has better returns than staking or lending ( altho there are risks too).

[Sparrow Exchange]

No, this type of leverage trading requires your account to be secured. If it exceeds the limit, your account will be burnt and everything will disappear. It's not as simple as you think, if making money is too easy, the whales were definitely involved in this type of transaction first. so I don't really like this kind of risky trade.

Hello! Let me try and help to clear some misconceptions

We all know that flash crashes are very common in this volatile crypto market. The volatility in the crypto market means that overly leveraged traders and investors will have to constantly face the problem of margin call, premature liquidation and large unforeseen losses.

However, the beauty of buying options is that risk is just limited to the premium you pay while you still get to enjoy leveraged returns on your position. Sparrow options, being covered, helps to further protect users’ positions.

Let me give you an example:

If you forked out $1,000 Premium Payable for a 1 BTC buy Put position at a Strike Price of $10,000 and BTC settles at $12,000, your risk from the trade is just capped at your Premium Payable. In comparison, if you short BTC futures and BTC settles at $12,000 from $10,000, your loss will be $2,000 and potentially uncapped depending on how much BTC rallies.

Likewise, if BTC settles at $8,000 from your 1 BTC buy Put position at a Strike Price of $10,000, you will profit $2,000, which is 200% returns from your $1,000 Premium Payable.

This is as compared to shorting BTC at $10,000. When the price reaches $8,000, your profit is still $2,000, which is a mere 20% return from your $10,000 position. You also risk your whole capital by placing this trade, as compared to buying a Put option where your risk is limited to your Premium Payable.

Especially in this volatile crypto market, buying Put options will be your best bet if you want to take advantage of a bearish move.

[prix]

Too often I see that 95-99% of traders empty their deposits for a long period of time. Here the other day there was again some kind of report from the stock exchange, there it was either daytrading futures or/and options and the same info - over the period of 3 years 98% were empty.
Actually, I don’t have any abilities to predict price movement, so I hodl mostly.

[avikz]

If BTC falls below 9k, you can force someone to buy your BTC at 9k]

How come? Can you please explain? I know the options market pretty well and found your statement amusing.

In this above scenario, if no one buys your contract, do your company offers physical settlement? Obviously the trader will have to pay the remaining price!

Please explain!

[teddybear]

can someone suggest me some books or videos, as well as strategies for trading options? Thanks.

[gettingrektallthetime]

If BTC falls below 9k, you can force someone to buy your BTC at 9k]

How come? Can you please explain? I know the options market pretty well and found your statement amusing.

In this above scenario, if no one buys your contract, do your company offers physical settlement? Obviously the trader will have to pay the remaining price!

Please explain!

hmm i think venalli was referring to options trading in general, not specifically to Sparrow Exchange (they have a very helpful community on Telegram https://t.me/SparrowExchange! helped to explain alot of options concepts to a noob like me)

That statement is right if it is on physical settlement, Sparrow I think they only offer cash-settlement (which is like what you said, buyer of the option earns the price difference) for now. But the thing about options is that since you set strike price at 9K, it means as a seller, you are ok to sell it at 9K, so still win-win situation 

[jamesndungu1]

I'm a conservative trader, this means that before i enter into a trade i must have an entry and exit strategy, I have also used stop losses on almost all of my trades. Options trading is risky for me because of the nature of the trade, as i like to choose long term trades based on future events occurrence which forms part of my trading signals. For a Day trader, I think options trading is an option but to me who is conservative and my trades are either short term or long terms - options trading is more rigid.

[Sparrow Exchange]

I'm a conservative trader, this means that before i enter into a trade i must have an entry and exit strategy, I have also used stop losses on almost all of my trades. Options trading is risky for me because of the nature of the trade, as i like to choose long term trades based on future events occurrence which forms part of my trading signals. For a Day trader, I think options trading is an option but to me who is conservative and my trades are either short term or long terms - options trading is more rigid.

Hi James! Would like to clear some misconceptions here.

Options trading is risky

Flash crashes are very common in this volatile crypto market. This means that overly leveraged traders and investors will have to constantly face the problem of margin call, premature liquidation and large unforeseen losses. In September 2019, a Bitcoin flash crash of over $1,500 caused $651m liquidation on Bitmex.

Great risk/reward with options

By buying a Put option instead of shorting, you do not have to worry about being forced out of position prematurely. Risk is limited to just the Premium Payable while you still enjoy leveraged returns on your position.

Options trading is rigid

Actually options are considered one of the most versatile trading tool in the market, enabling you to profit in any market condition, whether you think the market is going up, down or sideways.

On Sparrow, we also provide customizable options - you can pick your expiry date (options settlement is every Friday at 4pm (GMT+8)  - whether short term (1 week ) or longer term (few weeks).