Why not use call Options in a bull market? (BTC/ETH)

Discussion in 'Cryptocurrencies' started by NinjainPyjamas, Feb 13, 2020.

  1. If you think that prices will move up, and you want to trade 1 BTC worth of value but do not have 1 BTC, you can buy a Call option and profit from Bitcoin’s volatility.

    Why buy Call?

    Unlike spot trading which requires full collateral, buying a Call option allows you to participate in the movement of an underlying asset for a relatively small price (Premium Payable) while enjoying leveraged returns.

    Here’s a scenario:
    • You are bullish on BTC and expect it to trade above $11,000 on 6th March 2020
    • You can buy a Call for 1 BTC with Strike Price at $11,000, Settlement Date on 6th March 2020
    • The cost for making this position will be 238.25 SP$ (Premium Payable)

    How do I profit?
    • In order to profit from your buy Call, BTC will have to trade above your Breakeven Price at Settlement Date
    • Breakeven Price is calculated as [Strike Price + Premium Payable]
    • In this scenario, Breakeven Price will be $11,238.25 (11,000 + 238.25)
    • The higher BTC trades above your Breakeven Price at $11,238.25, the greater your profit. Technically, your profit is unlimited
    • However, if BTC trades below $11,238.25, your maximum loss will be limited to your Premium Payable (238.25 SP$), even if BTC goes to $0
     
    Last edited: Feb 13, 2020
  2. IAS_LLC

    IAS_LLC

    What's your purpose?
     
  3. Suggesting an alternative to vanilla trading. Options :D
     
  4. IAS_LLC

    IAS_LLC

    People here are well aware of options...
     
  5. Yeah, Options generally..but I havent heard much about Crypto Options. So, thought I might as well share info about it. In hopes that it might help someone or start a conversation about it.
     
  6. Overnight

    Overnight

  7. FriskyCat

    FriskyCat

    Another oversimplification of options.
     
    Overnight likes this.
  8. Overnight

    Overnight

    Indeed, options are building the space shuttle of trading from scratch, backwards, with time dilation.

    All other trading is just taking a ride in a car to Des Moines.

    Options folks are just insane.
     
    IAS_LLC likes this.
  9. Options can indeed get really complex but there are platforms taking the initiative to make it simpler for their users with intuitive UI. I'm more specifically taking about Sparrow Exchange but there are a few more platforms now.
     
    #10     Feb 13, 2020