Binance, the world’s leading cryptocurrency exchange, launched Bitcoin options on its Binance Futures trading platform. At the time of this writing, the feature is only available on the platform’s mobile versions available for both Android and iOS.
Binance Futures is where the users of the platform can place highly-leveraged cryptocurrency trades. Now, the team has also added Bitcoin options, allowing its users to access additional tools to better manage their risk.
In a press release shared with CryptoPotato, the exchange shared that its users will be allowed to purchase BTC call and put options with expiry between ten minutes to one day at market prices. Supposedly, this provides additional liquidity, substantially reduced spread, as well as low premiums.
Speaking on the matter was Changpeng Zhao, CEO at Binance, who said:
“Options contract is a much-anticipated product, allowing the traders and miners to effectively buy insurance on their positions and for speculators to take advantage of the market movements as well. There are more features and products in the pipeline.”
Currently, there are only BTC options available on the platform. However, according to Aaron Gong, VP at Binance Futures, the team will work to introduce more digital assets when “the first pair picks up.”
At first, the feature is only available to Android and iOS users through their mobile apps. However, the team is also working to integrate it into the web platform, according to the press release.
Bitcoin options are relatively new to the cryptocurrency market. Back in January 2020, the Chicago Mercantile Exchange (CME) launched the product as a result of the increasing interest in cryptocurrencies.
Options are most typically used for hedging purposes, but they can also be used for speculation. There are two types of options contracts – call options and put options.
Call options are essentially a contract that specifies the underlying asset (in this case, Bitcoin), the price at which it can be transacted (the strike price), and the expiration date of the contract. They are used when the price of the asset is considered to increase.
Put options are used when there’s an assumption for a price decline. The buyers of these options speculate on the decline and own the right to sell the shares at the strike price of the contract.