In order to master options trading in the cryptoverse, understanding the concept of underlying assets is critical. These assets form the backbone of options contracts, allowing investors to profit from price fluctuations or to hedge against their investments. But what exactly are underlying assets in crypto options, and which ones are currently available on the market? Let’s dive into the details.
What Are Underlying Assets in Crypto Options?
Underlying assets refer to the specific financial instrument or asset upon which a derivative, like an options contract, is based. In Tradfi, these assets might be stocks or commodities. But in Defi, the underlying assets are digital tokens also known as cryptocurrencies.
When you trade a crypto option, the value of that contract depends on the price of the underlying cryptocurrency. For instance, if you hold a Bitcoin options contract, the value of your contract will be determined by Bitcoin’s market price at any given time. Options traders can speculate on whether the price of a cryptocurrency will go up (call option) or down (put option), making them a versatile tool for both speculation and risk management.
Types of Crypto Options
Crypto options come in two primary forms:
- Call Options: Gives the holder the right, but not the obligation, to buy the underlying asset at a specified price (strike price) before the contract expires.
- Put Options: Gives the holder the right to sell the underlying asset at a specified strike price before the contract expires.
Both types of options provide traders with the flexibility to either profit from market volatility or protect their existing investments from adverse price movements.
The Top 6 Most Popular Underlying Assets Available in Crypto Options
The market for crypto options has grown rapidly in recent years, and several major cryptocurrencies now serve as underlying assets for these contracts. Here are some of the most prominent underlying assets you can trade on today:
- Bitcoin (BTC)
As the original and most widely recognized cryptocurrency, Bitcoin options dominate the crypto derivatives space. Bitcoin options are available on most major crypto options exchanges, allowing traders to hedge their BTC holdings or speculate on future price movements.
2. Ethereum (ETH)
Ethereum, with its powerful smart contract capabilities, is another dominant underlying asset in the crypto options market. Its vast ecosystem and second-largest market cap make it a natural choice for options traders.
3. Solana (SOL)
Solana has emerged as a significant player in the blockchain world due to its fast transaction speeds and low fees. As a result, Solana options are increasingly becoming available on more platforms, offering traders a chance to profit from its volatility.
4. Ripple (XRP)
Ripple (XRP), despite continually facing legal challenges, remains a strong player in cross-border payments and has become a popular asset for options traders.
5. Binance Coin (BNB)
Binance Coin, the native cryptocurrency of the Binance exchange, has seen significant growth and is now featured as an underlying asset in crypto options trading on select platforms.
6. Chainlink (LINK)
Chainlink, the leading decentralized oracle network, is another crypto asset used in options trading. Its pivotal role in powering DeFi applications makes it a key asset for options contracts, available on certain exchanges for more experienced traders.
Where to Trade Crypto Options?
As the market expands, more platforms are offering crypto options. Some of the leading exchanges include:
- Deribit: One of the most popular exchange platforms, particularly for Bitcoin and Ethereum options. Deribit is currently holding the highest market share of crypto options.
- Binance: The most popular exchange for spot and futures with high liquidity. But not too popular on options because of the difficult requirements in order to become an options writer.
However, one of the more exciting new exchanges that is gaining traction in the crypto options space is DBOE (Defi Board Options Exchange). DBOE provides a cutting-edge platform where traders can easily access a wide variety of underlying crypto assets, including 5 of out 6 major options (used to be 6 out of 6 but DBOE delisted XRP due to low demand, team DBOE is always on the line if users have any additional request even on options pairs). With its user-friendly interface, competitive fees and a wide variety of features to enhance user’s experience and risk management, DBOE is quickly becoming the go-to exchange for both beginners and experienced crypto options traders.
Additionally: DBOE is the only exchange across the cryptoverse that provides LINK options, DBOE is also on of the only 2 exchanges that provides options on SOL.
Why Choose DBOE?
Here’s why you should consider trading on DBOE:
- Wide Range of Underlying Assets: DBOE offers a diverse range of options including 5 of the 6 major options pairs.
- OB (On – chain Order Book): Ensure transparency and fairness, increase security.
- Price Range instead of Strike Price: Help investors to manage their risk more effectively
- User-Friendly Interface: DBOE’s platform is designed to make trading options intuitive and accessible for everyone, from beginners to advanced traders.
- Lowest requirements: Investors can start buy and sell their options from just $0.5
DBOE offers all the tools and features you need to navigate the world of crypto options with confidence. Whether you’re looking to hedge your crypto portfolio or capitalize on market movements, DBOE is the perfect platform to support your investment goals.
Learn step-by-step on how to trade options on DBOE now!
Start your options trading journey with DBOE today at: https://dboe.exchange/
or https://download.dboe.exchange/ on mobile.
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Disclaimer: The information in this article is not intended as investment advice. Cryptocurrency investment activities are not legally recognized or protected in some countries. Cryptocurrencies always involve financial risks.
