Digital asset exchange Binance recently introduced a new kind of BTC options contract that make things easier for traders and allows them to issue their own contracts for the 1st time.
The latest introduced option contracts are labelled “European-Style Vanilla Bitcoin Options.” Notably, these contracts permit exchange users to purchase BTC at an agreed-upon price upon the expiry of the contract, then trade it for other virtual assets.
As per the exchange, these European-style contracts also guard traders from volatility. Furthermore, traders can sell these Bitcoin contracts at a pre-mentioned price within a fixed time frame. The new contracts are settled in the Tether stablecoin.
However, European-style contracts also come with bigger risk. Earlier, in case of American-style contracts, Binance was the sole-issuer. But now, traders can issue the European-style options themselves.
This signifies that traders can set their own rules. Also, there are no limits on the magnitude of the contract, so long as the issuer has adequate collateral.
BTC options are a quite prevalent way to invest in the digital asset. It is anticipated that OI in BTC options will surpass ten billion USD next year, as per data from digital currency analytics firm Skew.
It is to be noted that Options and futures are leveraged trading instruments and one needs to be very careful while using them. If not used properly, they can swipe off your entire trading account. So, traders better be careful!
What do you think about the latest introduced Bitcoin options by Binance? Let us know in the comments below!
Image by Peggy und Marco Lachmann-Anke from Pixabay
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