Crypto options

An option is a contract that gives the buyer the right, but not the obligation, to buy (a call option) or sell (a put option) an asset at a set price, called the strike price, on or before a set expiry date. The buyer pays a premium for this right.

Options let traders bet on price direction with limited downside, since the most a buyer can lose is the premium. They are also used to hedge: a bitcoin holder can buy puts as insurance against a crash. Sellers (writers) of options collect the premium but take on potentially large losses if the market moves against them.

Most crypto options volume is in bitcoin and ether, historically concentrated on the exchange Deribit, with regulated options also traded on CME and on US spot bitcoin ETFs. Option prices depend heavily on implied volatility, and terms such as delta, gamma and theta describe how their value changes. Options are complex products best left until you understand them well.