If you have completed the study of crypto and options, congratulations, you already have a certain understanding of crypto options, and you can try to start trading.
This article will guide you to start your first options transaction on Coincall.
Coincall currently provides BTC options contracts and ETH options contracts, we take BTC options as an example.
On the Coincall homepage, click "Options", select the option contract you want to trade, and enter the options trading page. Click on Options –> BTC/ETH Options/ Trade Options to enter the Options trading page.
Note: The following guides and tutorials are examples and do not constitute any investment advice.
The current price of BTC is 22,500 USD. You predict that the price of BTC will continue to rise in the future. You choose to buy a BTC call option with a strike price of 23,000 on March 10, 23.
Select the option expiration date “10 MAR 23” at the top of the Option Chain.
Select the strike price of “23,000”
Select the option type on the left side of the Option Chain: “Call”
The relevant information about the option contract you want to trade will appear on the right side of the trading page.
Click on the desired Strike Price on the left side (Calls) of the option chain, and the order placement window will be on the right side of the trading page. In the order placement window, you can view the details of the options: Implied Volatility (IV), Delta, Gamma, and more.
Next, you can enter order parameters to place your options order.
a Set order type via Limit/Market
b Enter the price to buy or sell
c Enter the amount to buy or sell
d Select Reduce Only(optional)
For market orders, the margin required will not be shown as market orders as the price will only be known after the order is executed.
After you have entered the price and amount, you may see the margin required for the trade and the options Greeks calculated for you. You may also view the PnL probability chart below the order placement area for the expected profitability of the order of the options.
Click on Buy to bring up a confirmation window. Confirm that all the information you’ve entered is accurate and click on “Buy”. Your options order has been submitted successfully.
A pop-up window appears in the upper right corner of the web page to notify you that the order has been submitted.
If your order is not yet filled, it will appear in the "Open Orders" section of the Overview. If your order has been filled, it will appear under "Positions". Here you can see the detailed data of your position as well as the real-time PNL.
If you need to cancel your unfilled order, click on "Cancel" in "Open Orders" - "Actions". A pop-up window with the message "Order canceled" will appear in the upper right corner.
If you need to close your position in advance, please select the position you want to close under "Positions", and click on the "Market All" or "Limit" buttons to close the position.
After that, the system will show the "Order Confirmation" pop-up window. Confirm that all the information the system showing is accurate and click on “Confirm”. Your position will be closed at the system-calculated "Market price"/"Limit price 1651.3 USD".
The number of your positions will be reduced and the record will appear in the "Order History", where you can view your PNL.
If you do not need to close your position in advance, your position will be settled at 16:00 (UTC) on your option expiration date. You can view your PNL in the "Delivery" section.
The "Opening Cash Flow" is the premium paid/received for the option you buy/sell, and the "Settlement Cash Flow" is the gain/loss incurred during the entire period from the purchase of the option to the settlement of the option at expiration.
PNL = Opening Cash Flow + Settlement Cash Flow
The steps of "sell options" are roughly the same as "buy options". After confirming the order information in the third step, click the "sell" button.
The above is the process of buying and selling options, I hope it will be helpful to your transaction.
The main difference between buying an option and selling an option is the rights and obligations assumed by the parties.
When buying an option, the investor has the right, but not the obligation, to buy (call option) or sell (put option) a specific asset at a predetermined price before the option's expiration date. This right comes with a cost, known as the options premium. If the option expires without being exercised, the buyer loses only the premium paid.
On the other hand, when selling an option, the investor takes on an obligation to buy (call option) or sell (put option) a specific asset at a predetermined price before the option's expiration date. The seller collects the options premium from the buyer, but in case the option is exercised, the seller has to fulfill the obligation. As a result, selling an option carries a higher risk than buying an option.
Overall, buying an option provides the buyer with an opportunity to profit from a favorable market move while limiting losses to the cost of the premium. Meanwhile, selling an option generates income from the options premium but involves a higher risk of loss if the market moves against the seller.
The risks associated with buying options and selling options are different.
Buying options risks:
- Maximum Loss is limited to the premium paid. The maximum loss that a buyer can face when buying options is limited to the premium paid. The premium paid to buy an option is the cost of having the right to exercise the option.
- Time decay risk. Options have a limited lifespan, which means that they lose value over time due to time decay. If the option expires out of the money (OTM), the buyer loses the entire premium paid.
Selling options risks:
- Maximum loss is potentially unlimited. The maximum loss a seller of an option could face is potentially unlimited. The seller of an option is obliged to buy or sell an underlying asset at a set price (strike price) if the buyer of the option decides to exercise the option.
- Limited profit. When an options seller receives a premium for selling an option, the profit potential is limited to the value of the premium received. This means the options seller’s potential profit is limited, but the potential loss is unlimited.
- Market risk. Selling options also carry market risk. As prices of the underlying asset fluctuate, if they move in the opposite direction to the seller's expectations, they can quickly lose money.
In summary, buying options are a limited-risk strategy with a predetermined maximum loss, while selling options is a high-risk strategy with the potential for unlimited losses. However, selling options usually offer higher returns (premiums).
We hope that you will trade cautiously after fully understanding the possible risks of "buying options" and "selling options".
Remember to always trade responsibly and do your own research！
I hope you have a pleasant trading experience on Coincall~
If you have any questions during this process, please contact our customer service center for help.