Bitcoin options are financial derivatives that enable investors to speculate on the price of the digital currency with leverage or hedge their digital asset portfolios. Available on both traditional derivatives exchanges and on crypto trading platforms, Bitcoin options have emerged as a popular investment product among advanced crypto traders.
For individuals looking to trade Bitcoin options, finding the right trading venue that offers ample liquidity and a high level of security is essential. We’ve compiled the basics every option trader should know, and have structured this guide for trading Bitcoin options to answer the most common questions novice option traders have.
KEY TAKEAWAYS
- Bitcoin options are financial derivatives contracts that allow you to buy or sell Bitcoin at a predetermined price on a specific future date.
- Trading Bitcoin and other cryptocurrency options works much the same as other options, except they’re typically less liquid.
- There are some trading platforms and crypto exchanges where you can trade Bitcoin options; but you’ll need to set up and fund an account first.
- Trading Bitcoin options is riskier and more complex than trading spot Bitcoin, which is itself risky and speculative.
- Traders should conduct as much research as possible (including consulting with a financial advisor) before trading Bitcoin options, and must select a reputable reputable crypto derivatives exchange with strong security for their trades.