ETH Options: Exchanges, Fees, Pros, and Cons
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ETH Options: How And Where to Trade Ethereum Options

ETH options are agreements between a buyer and seller that allow you to either buy or sell ETH at some point in the future for an agreed-upon price. Options can be used to hedge your holdings, take leveraged bets, make money from volatility, and much more.

What are ETH Options?

There is more to trading ETH than just buying and HODLing. Like with traditional financial assets, cryptocurrencies have “derivative” instruments that can be traded. The most basic of these derivative instruments is an “option”. 

At their core, options allow buyers to either buy or sell ETH at a future point in time for a certain predetermined price. The option itself can be purchased for an option “premium”, which is typically a fraction of the price of the underlying asset — ETH, in this case. ETH options are a form of crypto derivative since they “derive” their value from the underlying ETH tokens.

Options can be either bought or sold, and they are exercised according to certain conditions. The buyer of the option has the right, but not the obligation, to exercise the option — to sell the ETH or to buy more ETH at a predetermined price. The seller of the option collects the option premium upfront but must accommodate the buyer if they decide to exercise the option — either buying their ETH or selling ETH to them at the option contract’s predetermined price point.

How Does ETH Option Trading Work?

ETH options are split into two main categories: calls and puts. A “call” option gives the option buyer the right (but not the obligation) to purchase ETH for a predetermined price at some point in the future. Call options are useful when you believe the price of ETH will be higher in the future than it is right now. Buying a call option secures the lower price and allows you to purchase ETH for a low price even when it’s trading at a high price in the future. “Put” options, on the other hand, allow you to sell ETH for a predetermined price at some point in the future. This is useful when you believe ETH is going to decline in price and you want to lock in a trade at today’s price that actually gets executed in the future.

The other two main terms when it comes to options are the “expiry date” and the “strike price”. The expiry date is simply the date when the option may be exercised. For call options, this is the date when you can purchase ETH at the price that you secured earlier. For put options, this is the date when you can sell ETH for the price secured earlier. The “strike price” is the price that the options contract guarantees you. For calls, the strike price is the price you can purchase ETH at on the expiry date, while for put options, the strike price is the price you can sell ETH for on the expiry date.

Options contracts allow buyers to decide whether or not they want to exercise the option. If a buyer exercises their option, the option seller is required to fulfill their end of the deal — either buying or selling ETH, depending on whether the option is a call or a put. However, for most options contracts, the underlying ETH never actually changes hands. Instead, the value of the options contract itself fluctuates with the expected value of the trade. For example, if a call option allows you to buy ETH for $1,500 while ETH is trading at $2,000, that option is worth $500. Most traders simply trade the options contract itself on the open market rather than executing the option and trading the underlying ETH. This ensures a more speedy and painless transaction process than if the ETH had to also be traded along with the options at expiry.

ETH Options Trading vs. Traditional Options Trading

ETH options trading is similar in fundamentals to traditional options trading. The difference is, of course, that the assets being traded are different. In traditional markets, securities such as company shares are being exchanged, while in crypto trading, ETH is being exchanged. Some other differences include:

ETH OptionsTraditional Options
VolatilityHigh — prices fluctuate a lotLow — prices do not fluctuate as much
RiskHigher — due to more market volatilityLower — due to less volatility
YieldsHigher risk means higher rewards when you’re rightLess risky environment means that premiums and leverage are also smaller
Exchange FocusPrimarily focus on crypto optionsPrimarily focus on traditional options
Trading Hours24/7Monday — Friday, 9:30 AM to 4:00 PM EST

ETH Options vs. ETH Futures

In addition to options, there is another type of derivative contract called a futures contract. At their core, futures are similar to options in that they give you the right to buy or sell an asset for some price at some point in the future. They also differ from options in some significant ways, however. While options give buyers the right, but not the obligation, to exercise their contracts, futures require buyers to exercise all futures contracts on their respective expiration dates. Additionally, futures contracts have support for unlimited time frames without an expiration date — these are called “perpetual” futures. Finally, most derivatives across exchanges actually come from futures, not options, as futures are the preferred instrument among derivatives traders.

Spot Options Futures 
ExerciseHave the right, but not the obligationMust be exercised
Expiration dateRequiredFutures contract may be perpetual (no expiration)
VolumeGenerally lowerMakes up the majority of derivative trading volume

Why Trade ETH Options?

Trading ETH options can be a good way to earn returns without having to actually own any ETH. Many options trades also allow traders to take on margin and trade with leverage. Trading ETH options can be a winning strategy, but it also carries with it risks, so it’s important to be familiar with the common scenarios where options are used.

  • Hedging Positions: One of the most common uses of ETH options is to hedge your portfolio. If you are holding a lot of ETH that you expect will appreciate in price, it may be worthwhile to also buy some put options as downside protection. This way, if ETH goes down in price, you can exercise your put options and limit your losses.
  • Trade on Volatility: While traditional “spot” trades can make you money when ETH goes up or down in price, options can be used to trade on more complex variables such as volatility. When market volatility is high, options are expensive, and when it’s low, options are cheap. If you believe market volatility will go in a certain direction in the future, you can use options to make that bet.
  • Earn Passively: Options are complex instruments that allow for some trades that minimize downside and provide steady returns. One of these is to sell covered calls, a strategy we cover in the “ETH Option Trading Strategies” section of this article.
  • Leveraged Price Speculation: Buying an ETH option for a fraction of the price of ETH can quickly become profitable as ETH moves in price. For example, if you buy an ETH call option for $50 and ETH appreciates by $300, your option’s value will move in step with that of the ETH market. This means that you will be able to net $250 ($300 price appreciation minus $50 option premium) from an initial $50 investment — a 5x return. Keep in mind, however, that leverage can also magnify losses, so it is a risky strategy.

Styles and Types of Options

There are several different types of options that each serve a different purpose. “Call” options give you the right to purchase ETH at a predetermined price in the future. Meanwhile, “put” options give you the right to sell ETH at a predetermined price in the future. 

There are also two types of calls and puts: American and European. With American options, the option can be exercised (meaning the underlying asset can be bought or sold) at any point leading up to and including the expiration date. With European options, the option can only be exercised on the expiration date.

AmericanEuropean
Call OptionGives you the right to buy ETH at any point up to and including the expiration dateGives you the right to buy ETH only on the expiration date
Put OptionGives you the right to sell ETH at any point up to and including the expiration dateGives you the right to sell ETH only on the expiration date
  • Calls: The right to purchase ETH for a predetermined price at a set date in the future.
  • Puts: The right to sell ETH for a predetermined price at a set date in the future.
  • American: American calls and puts can be exercised before or on the expiration date.
  • European: European calls and puts can only be exercised on the expiration date.

How Expiration Works

ETH options are contracts that give you the right to buy or sell ETH at some date in the future. The future date at which this transaction may take place is referred to as the “expiry” date. 

Each options contract has an expiry date, and on most exchanges, options can be purchased with expiry dates as soon as tomorrow or as far away as next year. American and European style options differ in their approaches to expiry dates. American options can be exercised at any point up to and during the expiry date, while European options can only be exercised on the expiry date. 

An example: If you believe that ETH will go up to $2,000 from a current price of $1,500, you may want to purchase a call option to benefit from this price difference. When picking your options contracts, you will have to decide in what timeframe you believe this price appreciation will happen. If you think it will happen next week, you should purchase an option with an expiry date of next week. If you think it will be several months, you should purchase an option with a longer expiration.

How Strike Prices Work

The second component of an option after the expiry date is the strike price. The strike price of an option is the agreed-upon amount for which ETH may trade hands on the expiry date. For call options, the strike price is what ETH can be bought for on the expiry date, while for put options, the strike price is what ETH can be sold for. 

An example: If you purchase an ETH call option with a strike price of $1,500, you will be able to purchase ETH for $1,500 on the expiry date, regardless of what ETH is actually trading for that day. On the other hand, if you purchase an ETH put option with a strike price of $1,500, you will be able to sell ETH for $1,500 on the expiry date, regardless of what ETH is selling for at that time. 

How Do You Make Money Trading ETH Options?

All options you buy will have an option “premium” associated with them. This is the price of the options contract itself. When buying an option, profitability is all about the option value exceeding the premium you paid. If you sell options, the buyer will pay the premium to you, and you will make money if the option does not get exercised (goes unused). 

To illustrate ETH options, let’s take a look at a profitable and an unprofitable option trade:

Winning Trade

You buy an ETH call option for $50 that has an expiry date of November 30th and a strike price of $2,000. You start out negative since you spend $50 for the option premium.

On November 30th, the price of ETH is $2,350. The value of your option is now $350 since that is how much someone could net by buying ETH at the strike price of $2,000 and selling it on the open market for $2,350. 

You trade the option profitably, and you earn $300 net. Your net gain comes from the $350 option value minus the $50 premium that you paid. You have earned $300 with a $50 investment — a 6x return.

Losing Trade

You sell an ETH put option for $40 that has a strike price of $1,800 and an expiry date of January 11th. From the beginning, you are in the green $40 since you collect the option premium upfront. 

On January 11th, however, the price of ETH is $1,500. The person whom you sold the option to exercises it, selling their ETH to you for $1,800 — since this is more than they can get for their ETH on the open market. 

Here you lose money since your $40 premium that you collected is overshadowed by the loss you take by buying ETH above its market value. 

Examples of Buying and Selling Calls

When you buy an ETH call, you have the right, but not the obligation, to purchase ETH for a predetermined price at some point in the future. This costs you an initial premium, so your trade will only be profitable if the price of ETH at expiration is higher than your strike price + the premium you paid. 

Selling a call nets you the option premium upfront but obligates you to sell ETH to the option buyer on the expiry date if they choose to exercise the option. 

For example: If you sell an ETH call option with a strike price of $2,000, and, on expiry, the price of ETH is $2,300, the buyer will net $300 from the trade since he will purchase ETH for $2,000 from you and sell it on the open market for $2,300. 

Examples of Buying and Selling Puts

When you buy an ETH put, you have the right, but not the obligation, to sell ETH at a predetermined price at some point in the future. This will again cost you an initial premium and you will make money if the price of ETH goes down. 

Selling a put nets you a premium initially, but you have to buy ETH at a predetermined strike price from the option holder if they choose to exercise their put.

For example: If you sell a put option on ETH with a strike price of $2,000, you initially collect a premium, but you have to buy ETH at $2,000 on the expiry date, regardless of how much ETH is trading for at that time. If ETH is trading significantly lower than $2,000, you will lose money, and the option buyer will earn from the trade.

Top Exchanges for Trading ETH Options

Supported TokensFeesMinimum Order SizeExpiration DatesStrike Prices
DeribitETHBTCSOLMaker Fees: 0.03% of the ETH value
Taker Fees: 0.03% of the ETH value
1 ETHDaily, Weekly, Monthly, Quarterly, YearlyIncrements of $25 – $100
BinanceETHTrading fee: 0.02% of the ETH value, capped at 10% of the option value
Exercise fee: 0.015% of the ETH value, capped at 10% of the option value
0.01 ETHDaily, Weekly, Monthly, Quarterly, YearlyIncrements of $25 – $100
Bit.comETHBTCBCHMaker Fees: At most 0.02% of the ETH value
Taker Fees: At most 0.05% of the ETH value 
Delivery Fees: 0.015% for all options except daily expiration options
1 ETHDaily, Weekly, Monthly, Quarterly, YearlyIncrements of $50 – $100
OKXETHBTCSOLMaker fees: At most 0.02% of the ETH value
Taker fees: At most 0.03% of the ETH value
Options exercise fee: 0.02% for all options except daily expiration options
0.1 ETHDaily, Two days, Weekly Two weeks, Three weeks, Monthly Two months, Quarterly Two quartersIncrements of $25 – $100

Deribit

Trading ETH options on Deribit
Supported TokensFeesMinimum Order SizeExpiration DatesStrike Prices
DeribitETHBTCSOLMaker Fees: 0.03% of the ETH value
Taker Fees: 0.03% of the ETH value
1 ETHDaily, Weekly, Monthly, Quarterly,YearlyIncrements of $25 – $100

Deribit is the largest exchange by trading volume for trading crypto derivatives such as options and futures. Deribit has a ton of liquidity for its derivatives markets, and it supports a range of advanced trading tools.

Pros

  • Insurance fund of over $30 million dollars
  • No trading fees on some alternative assets, such as SOL
  • The biggest derivatives exchange out there

Cons

  • Not available for residents of the US
  • Since it’s dedicated to derivatives, the interface is complex
  • Accounts can only be funded in BTC

Option Trading ETH on Deribit

Deribit keeps it simple with its options markets as they currently support only three assets: BTC, ETH, and SOL. Options contracts can be selected from a predetermined list with a wide range of expiration dates and strike prices.

Settlement of the options contracts happens in the underlying currency — meaning ETH contracts are settled in ETH. Profitable options contracts will automatically be exercised at the expiration date.

Fees

Similarly to most other exchanges, Deribit uses a maker/taker fee structure. Makers are traders who add liquidity to the order book and thus pay less fees. Takers, on the other hand, take liquidity and pay a fee premium. 

Currently, both maker and taker fees for ETH options contracts are one of either: 

  • 0.03% of the price of ETH or
  • 0.0003 ETH per options contract

How Does Settlement Work?

Options are settled automatically and executed if they’re profitable for the buyer automatically. At expiry, if the option is executed, the seller’s account is debited, and the buyer’s account is credited with the expiration value of the option.

Types of Options Available

For all three assets supported by Deribit, the following options contracts are available:

  • Call options
  • Put options

Strike Prices

The Deribit platform provides a choice of strike prices across several expiration dates. For ETH assets, strike prices are in increments of $25 for prices near ETH’s current price and go to increments of $100 for prices outside the current range of ETH.

trading eth options on Deribit

Expiration Times

In addition to strike prices, a range of predetermined expiration times is available for options contracts. These go from daily to weekly, monthly, quarterly, and yearly contract lengths.

Trading ETH options on Deribit

Start trading ETH options on Deribit.

How to Use Deribit for Trading ETH Options

Step 1: Navigate to https://www.deribit.com/ and log in or create an account if you don’t yet have one.

Trading ETH options on Deribit

Step 2: Select “Options” on the navigation bar.

Trading ETH options on Deribit

Step 3: Choose the option you would like to trade from the available list of expiration dates. 

Trading ETH options on Deribit

Step 4: The next page will show you the trading activity for the options with your chosen expiration date. Select between call or put options and click on the one with your desired strike price to bring up the order form.

Trading ETH options on Deribit

Step 5: Enter the amount you would like to trade and click “Buy” or “Sell”, depending on what position you would like to take.

Trading ETH options on Deribit

Step 6: After reviewing your trade details, click “Create a buy order” to complete your trade.

Trading ETH options on Deribit

Binance

Trading ETH options on Binance
Supported TokensFeesMinimum Order SizeExpiration DatesStrike Prices
BinanceETHTrading fee: 0.02% of the ETH value, capped at 10% of the option value
Exercise fee: 0.015% of the ETH value, capped at 10% of the option value
0.01 ETHDaily, Weekly, Monthly, QuarterlyIncrements of $25 – $100

Binance is the largest crypto exchange in the world by trading volume. Its options offering is relatively limited, but ETH traders are in luck since the one option pair that Binance does offer is ETH/USDT. In this pair, ETH options are available for trade and are denominated in the stablecoin USDT.

Pros

  • Largest exchange in the world by trading volume
  • Straightforward trading fee structure
  • Platform’s native token, BNB, is one of the most valuable cryptocurrencies

Cons

  • Options have to be settled in USDT rather than ETH or fiat USD
  • Options contracts limited to just the ETH/USDT pair
  • Not available to US traders

Option Trading ETH on Binance

Similarly to other options trading platforms, Binance allows traders to pick out options from a set of predetermined strike prices and expiration times. The exchange’s single options asset, ETH/USDT, trades ETH options and is settled in the stablecoin USDT.  

Fees

Fees on Binance for options trades are very straightforward. Options contracts fetch the following fees:

  • Exercise fee: 0.015% of the value of the underlying asset (capped at 10% of the option value)
  • Trading fee: 0.02% of the value of the underlying asset (capped at 10% of the option value)

Types of Options Available

ETH call and put options that are settled in USDT are available.

How Does Settlement Work?

ETH/USDT options are settled in the USDT stablecoin.

Max Leverage

Leverage up to 100x is available on Binance.

Strike Prices

ETH/USDT options are available for a range of predetermined strike prices. These prices vary in increments from $25 to $100 depending on how far from the current ETH price the option’s strike price is.

Trading ETH options on Binance

Expiration Times

Binance options expire daily, weekly, monthly, and quarterly.

  • Daily options will expire at 08:00 UTC on each day of expiry.
  • Weekly options will expire at 08:00 UTC on Friday of every week.
  • Monthly options will expire at 08:00 UTC on the last Friday of each month.
  • Quarterly options will expire at 08:00 UTC on the last Friday of each quarter.

Start trading ETH options on Binance.

How to Use Binance For Trading ETH Options

Step 1: Navigate to Binance.com and log in or register if you don’t already have an account.

Trading ETH options on Binance

Step 2: Use the navigation bar to find the “Options” option under the “Derivatives” tab.

Trading ETH options on Binance

Step 3: Agree to the Binance Options Service Agreement and click “Open Options Account” to complete your options account setup.

Trading ETH options on Binance

Step 4: Fund your account with the assets you plan to trade by using the “Transfer” function.

Trading ETH options on Binance

Step 5: To open a position, first decide if you will be trading calls or puts. Then, select a specific option from the list of available strike prices and expiration dates.

Trading ETH options on Binance

Step 6: Use the trading interface to enter the amount you would like to trade.

Trading ETH options on Binance

Bit.com

Trading options on Bit.com
Supported TokensFeesMinimum Order SizeExpiration DatesStrike Prices
Bit.comETHBTCBCHMaker Fees: At most 0.02% of the ETH value
Taker Fees: At most 0.05% of the ETH value 
Delivery Fees: 0.015% for all options except daily expiration options
1 ETHDaily, Weekly, Monthly, QuarterlyIncrements of $50 – $100

Bit.com is primarily known for its options and futures markets. The exchange features a range of strike prices and expiration dates, several supported assets for options contracts, and relatively low fees.

Pros

  • Auto-settles profitable options and credits the option value to your account
  • Take advantage of leverage up to 10x for options contracts
  • Low trading fees

Cons

  • Trading minimums are higher when compared to other platforms
  • Bit.com charges delivery fees in addition to trading fees
  • Limited selection of assets with options contracts

Option Trading ETH on Bit.com

The Bit.com platform offers options contracts for BTC, ETH, and BCH tokens. The exchange allows traders to select what assets their options trades are settled in. USD-M markets are settled in USD, while COIN-M markets are settled in the respective coin. 

Similarly to some other options platforms, Bit.com automatically settles options trades at expiry and credits the accounts that have earned a profit. The exchange also offers 10x leverage for traders who want to use margin on their trades and a tier system for fees that provides discounts based on trading volume.

Fees

Bit.com uses a maker/taker model for their trading fees. Traders who add liquidity to the order book are makers and have lower fees than traders who take liquidity — the takers.

In addition to trading fees, Bit.com charges a 0.015% delivery fee on all options except for daily options. Total fees for options are capped at 12.5% of the option value. 

The below table examines Bit.com’s tiered model for trading fees:

Types of Options Available

Bit.com provides call-and-put options for the BTC, ETH, and BCH assets. Each options contract is either COIN-M, which means that options are settled in the underlying crypto, or USD-M, which means that options are settled in USD. 

COIN-M contracts are available for all three assets (BTC, ETH, and BCH), while USD-M markets are only available for BTC options.

How Does Settlement Work?

The exchange automatically executes any profitable options contracts on the date of expiry. ETH options are considered COIN-M contracts and are settled in ETH.

Max Leverage

50x is the maximum leverage level.

Strike Prices

The ETH options markets allow you to pick from a range of strike prices and several different expiration dates. Strike prices for ETH are in increments of $50 for prices close to the current price of ETH and go to increments of $100 for prices further away. 

Trading ETH options on Bit.com

Expiration Times

You can choose from several different expiration dates through the options interface on the platform. Bit.com supports daily, weekly, monthly, and quarterly expiration dates.

Start trading ETH options on Bit.com.

OKX

Trading ETH options on OKX
Supported TokensFeesMinimum Order SizeExpiration DatesStrike Prices
OKXETHBTCSOLMaker fees: At most 0.02% of the ETH value
Taker fees: At most 0.03% of the ETH value
Options exercise fee: 0.02% for all options except daily expiration options
0.1 ETHDaily, Two days, Weekly, Two weeks, Three weeks, Monthly, Two months, Quarterly, Two quartersIncrements of $25 – $100

Headquartered in Hong Kong, OKX is a crypto exchange that offers a range of advanced trading tools for derivatives traders, as well as low trading fees, and a host of supported assets.

Pros

  • Finer selection of option expiration dates compared to other exchanges
  • Rock-bottom trading fees
  • Strike prices in small increments that allow for more specific trades

Cons

  • USD is not supported as a settlement asset
  • Documentation for the platform is not comprehensive
  • Not available to US traders

Option Trading ETH on OKX

OKX supports trading ETH options across a wide range of strike prices and expiration times. The platform’s trading fees start at just 0.02% for makers and 0.03% for takers, and fees decrease even more as trading volume goes up.

The exchange also supports BTC and SOL options contracts, and all options trades are settled in the underlying asset.

Fees

OKX uses the popular maker/taker fee model where traders who add liquidity (makers) pay less in fees than traders who take liquidity (takers). Maker fees start at just 0.02% while taker fees start at 0.03%. Both types of fees can be lowered even more through higher trading volume, custodying more assets on the OKX exchange, and holding more of OKX’s native OKB token.

Below is a breakdown of the tiered fee system. Note that option fees are capped at 12.5%.

Trading ETH options on OKX

Types of Options Available

Call and put options for ETH, BTC, and SOL are available.

How Does Settlement Work?

ETH options on OKX are settled in ETH.

Max Leverage

Up to 100x.

Strike Prices

For ETH options, the strike prices available are in increments of $25 for those near the current ETH price. As the strike prices diverge from the current ETH price, they become separated into increments of $50 and then $100.

Expiration Times

OKX maintains a wide range of expiration times:

  • Daily
  • Two days
  • Weekly
  • Two weeks
  • Three weeks
  • Monthly
  • Two months
  • Quarterly
  • Two quarters

Start trading ETH options on OKX.

ETH Option Trading Strategies 

Options open up a world of advanced trading strategies that are not available with traditional spot trading. Below is a recap of just a few of these strategies, along with a side-by-side comparison of each.

Buying puts to hedge existing holdingsSelling covered callsStraddle option strategyBull call spread
Earn when ETH priceGoes downDepreciates or appreciates a littleMoves significantly in either directionMoves little in either direction
Premium costThe cost of the putsYou earn from the premiumYou pay double the premium since it’s two callsThe premiums offset each other and there is little cost
Risk factorRisk is losing your option premium fundsRisk is missing out on the upside if ETH appreciates significantlyRisk is losing money on the premiums if the price of ETH does not move enoughRisk is missing out on the upside if ETH price moves in either direction significantly

Buying Puts to Hedge Existing Holdings

One of the most basic use-cases for buying options is to hedge existing holdings. The most popular way to do this is to buy puts as a hedge for your long positions. Since option premiums are a small fraction of the value of ETH, you can put a few hundred dollars in put options to work to secure a multi-thousand dollar payout if the price of ETH goes down. Alternatively, if the price of ETH goes up, your existing ETH holdings appreciate and cover the option premiums you paid. 

Selling Covered Calls

Covered calls are simply a fancy way of saying that you sell a call where you own the underlying asset. For example, if you sell an ETH call option and you have the ETH necessary to fulfill your obligation if the option buyer exercises the call option, you are selling a covered call. Since you are holding the underlying asset, covered calls can be profitable if the price of the underlying asset does not move much in the short term. If the price moves significantly before the expiry date, however, you are giving up on the ETH upside since you must use your ETH to fulfill your obligation as an option seller, rather than selling it on the open market during large price moves.

Straddle Option Strategy

A straddle is when you purchase a call option and a put option with the exact same expiry date and strike price. At first, this may seem like the trade would cancel itself out and you simply pay an option premium twice — and this is the case, but only at first. If the price of ETH moves significantly enough to outweigh the option premiums you paid, this strategy is profitable. What’s nice about a straddle is that the price can move in either direction — up or down — and you simply execute either the call or put accordingly.

Bull Call Spread

If you believe the price of ETH will fluctuate within a small range of the current price, you can bet on this by executing a bull call spread. This is done by buying a call option and simultaneously selling a second call option with the same expiry date but a higher strike price. In this case, the premium from selling the second call partially offsets the premium paid to buy the first call. If the market fluctuates between your two strike prices, you will make money. However, if the market goes outside of the bounds set by the strike prices, your trade will end up slightly negative.

Trading Options Vocabulary

  • Uncovered call: Selling a call option without holding the underlying asset (such as ETH) is known as an uncovered call. Selling uncovered calls can be a risky strategy because if the buyer of the option chooses to exercise it, you will have to purchase the underlying asset at the market price at the time of expiry and sell it for the strike price, which will almost always be higher.
  • Option margin: The option margin is the underlying asset that you hold in your account when you sell an option. If you’re selling ETH options, for example, the ETH you hold in case the option gets exercised by the option buyer is known as the “option margin”.
  • USD-denominated options: While some options on crypto exchanges will be settled in ETH or other tokens, many exchanges also offer options settled (or “denominated”) in USD or a stablecoin.
  • Covered call: When you hold the underlying margin of a call option that you sell, the option is considered a “covered” call. Selling covered calls can be a low-risk strategy that can be profitable as you earn from the option premiums. 
  • Portfolio margin: Many options trading platforms look at the value of your portfolio assets to determine how much leverage you can take on when making your options trades. The margin available in your portfolio is known as “portfolio margin”.
  • Unified margin: When determining your portfolio margin, many platforms will look at all of the assets in your account, rather than just at the asset you’re trading options for. Platforms that allow this refer to this feature as “unified margin”.
  • In the money (ITM): Options that are “in the money” are profitable to execute. Call options are in the money whenever the price of ETH is higher than the option strike price at expiration. Put options are in the money whenever the price of ETH is lower than the option strike price at expiration. 
  • At the money (ATM): If the price of the underlying asset, such as ETH, is the same as the strike price of the option, then the option is considered “at the money”.
  • Out of the money (OTM): Options that are “out of the money” are not profitable to execute. Call options are out of the money whenever the price of ETH is lower than the option strike price at expiration, while put options are out of the money whenever the price of ETH is higher than the option strike price at expiration.

The Greeks

  • Theta: Theta is a measure of how much the price of an option is expected to change in a one-day span, all else being equal.
  • Delta: Delta measures how much the price of the option will change when the price of the underlying asset (such as ETH) changes, all else being equal.
  • Gamma: Gamma is a measure of how much delta will change when the price of the underlying asset (such as ETH) changes, all else being equal. Gamma is a measure of the rate of change of delta.
  • Vega: Vega is a measure of how much the price of the option is expected to change given a 1% change in volatility, all else being equal.

Tips for Choosing an ETH Exchange for Trading Options

Given ETH’s popularity, almost every exchange out there that supports options trading offers ETH derivatives. This means that you have a wide range of platforms to choose from when picking your exchange of choice. Here are some factors to consider when choosing an exchange:

  • Options offered: If you’re just looking to trade ETH options, your exchange of choice will most likely support the asset. However, you may find yourself looking to trade altcoins like SOL or ADA in the future. Selecting an exchange which supports a wide range of coins is usually a good bet.
  • Fees: Fees are usually where exchanges make the majority of their money. To encourage new signups, different exchanges will often compete on fee structures, so comparing fees can be critical.
  • Payment options: The supported payment methods — whether fiat, stablecoin, or crypto — can differ significantly between exchanges. Selecting an exchange that has payment methods friendly to your planned trades can help you avoid gas and conversion fees.
  • KYC requirements: Know Your Customer (KYC) is an identity verification process that many exchanges are legally obligated to require from their customers. Some exchanges in international jurisdictions don’t have this requirement.
  • Customer support: Anything can go wrong on an online platform and — especially when dealing with money — it’s important to have timely support on standby. Some platforms offer better support than others.
  • Software integration: For more advanced traders, software integrations through APIs for automated trading may be an important consideration. The majority of professional platforms offer these as a service.

To Sum it Up

ETH options trading is an important part of the intermediate trader’s toolkit. In moving beyond just buying and selling ETH, options give you the opportunity to hedge your bets, earn from volatility, take levered positions, and limit your market exposure in creative ways. Options are a step up from basic trading, however, with unique terms and, often, more risk. Therefore it’s important to do your research well before diving into options trading.

Frequently Asked Questions

  1. Are there ETH options?

    Yes. As the second biggest cryptocurrency, ETH has a robust options market that offers options and liquidity for even the most advanced traders.

  2. Does Binance have ETH options?

    Yes. Binance offers an ETH/USDT pair that allows for ETH options trading and settles contracts in USDT.

  3. What are the Ethereum options prices?

    ETH option premiums depend on the price of Ethereum; however, they normally range from the low double digits to several hundred dollars.

  4. How do ETH options work?

    ETH options can be used to buy or sell ETH for an agreed-upon price at some point in the future.

  5. Can you buy options on Ethereum?

    Yes. Ethereum options are sold through most major crypto exchanges.

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