Hi It's Unicorn

 

Here let’s look at options trading interface:

 

1. It’s the detailed information of the options. BTC index price and remaining exercise time is the most important.

2. There are other options on the left for reference, click "All expirations" to return to the previous page.

3. The tendency chart of BTC is on the middle.

4. There is an order book on the right, you can check the bidding status of other people as a reference.

5. Here are four ways to place an order as following.

 

There is a drop-down menu next to the field for entering the price. We can find there are four methods to place order.

 

 

1. Custom orders: It’s similar to the limit order You can enter the price by yourself. 

2. Best bid Offer orders(BBO): It will place the user’s order by selecting the ask 1 or bid 1 price on the order book.

3. Bid 1 orders: The buyer's price which is the closest to transaction price

4. Ask 1 orders: The seller's price which is the closest to transaction price

 

If you are not familiar with the bidding method, you can choose BBO orders. You can check the ask 1 or bid 1 price on the order book as reference.

 

Buyers and sellers of options

 

Buyer: Unlimited profit, biggest loss is the premium.

Seller: Biggest profit is the premium, unlimited losses.

 

As the buyer, you can purchase call option or put option according to the market trend. You can earn the profit when the price trend is consistent with the forecast you bought. 

 

For the "BTC – 210408 – 33000 – C", the strike price is USDT33,000.

 

Assuming that the current price is USDT31,000, and I place an order to Bid 1 1626.82 and purchase 0.001 cont, the amount I spend is about USDT1.63, including transaction fees.

 

If the price reaches USDT35,000, I can exercise my right as stipulated by the Options. The profit is: (35,000 – 31,000) × 0.001 – 1.63 = USDT2.37, and the rate of return is 1-(2.37 / 1.63) = 45%;

 

On the contrary, if the price falls, or does not reach USDT33,000, I can also choose not to exercise my right of the contract. The loss is USDT1.63 of the premium.

 

Remember no matter you exercise your right as stipulated by the Options contract or not, the premium is a cost you must pay.

 

The seller sells the option to earn buyer's premium so hopes that the buyer determines wrong market trend to reduce the loss. In the process of completing an options transaction, the seller is responsible for supplying enough margin to ensure that the options can be exercised without any problems. The seller has to provide sufficient collateral. If not enough collateral is provided, the Options Seller will undergo forced liquidation and lose all of their collateral. The seller's profit is the premium paid by the buyer, and the remaining deposit will be returned to you. If the buyer exercise their right as stipulated by the Options contract, the seller has the corresponding obligation to fulfill the transaction. The loss is the difference paid to the buyer minus the premium paid by the buyer.