Re: Crypto volatile again, Whats stopping you from trying Options Trading?
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?
Pretty well said, but problem here in crypto market is volume in the options. I barely know only bitmex allowing you with options for Bitcoin and a few cryptocurrencies and these are traded with pretty less volume. Which means even if you think that you have made a wrong choice and you want to exit the whole scenario with a loss you just can't. I hope you know that most people make their fortune using option selling and not buying because decay of time is in your favour. But in crypto these types of option selling is impossible because situations may come when you might even be unable to sell your option at Stop loss. Shorting is a much more safer game when it comes to option. 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?