Trading has become one of the most widespread activities in the cryptocurrency area, being in the center of attention until the users saw it as a minimal-effort investing activity.
One of the popular branches of trading is stock trading. Stock trading refers to buying and selling of shares in a particular company. If you own the stock, you own a piece of the company. Traders watch the short-term price fluctuations of these stocks closely and then try to buy low and sell high.
Since not so long ago, whether we speak of cryptocurrency or the traditional market, the trading activity has adopted options as a new investment opportunity. People use options for income, to speculate, and to hedge risk.
As for what is an option, it is a contract that gives the buyer the right to buy or sell an underlying asset at a specific price on or before a certain date.
When the Bitcoin and the Ethereum options appeared, each with its advantages, things became much more straightforward. Also, in a short time, trading options started to be offered by more platforms on the market.
The variety was both an opportunity and an impediment because it has become hard to choose the best platform for the users. Here we will come to help.
Getting started with options trading
How can you learn to trade options? You can learn about options trading for free through online resources, including YouTube, where you can find hundreds of videos. However, a significant part of learning to trade options comes from watching professional traders do their thing daily and taking notes from their commentary and analysis.
When should you buy options?
Whether the volatility will increase or decrease, even if the stock price remains at the same place, the option’s value can go up if volatility goes up. It is always advisable to buy options when the volatility is likely to go up and sell options when it is expected to go down.
There’s a common misconception that options trading is like gambling. But it is not really that way. If you know how to trade options or can follow and learn from a trader, trading in options may become a way to reduce your risk.
How do Ethereum and Bitcoin options work?
Options trading is the trading instrument that gives you the right to buy or sell specific security on a particular date at an exact price. An option is a contract linked to an underlying asset, for example, a stock or another security. In this case, an Ethereum option is a contract linked to Eth’s evolution linked to a specific time frame.
Many users are wondering if trading Ethereum is profitable. Recent data from IntoTheBlock suggests that more Bitcoin and Ethereum traders are in profit despite the recent pullback of the cryptocurrency.
Options buyers choose their strike and expiry price and pay a premium to purchase an option. Option sellers also post collateral to ensure they meet their obligations and receive the premium paid by buyers for taking this risk.
To start using the Ethereum option is simple. First, open an options trading account. Before using trading options, pick which options to buy or sell. Then predict the option strike price. After, it would help if you determined the option time frame.
Where to buy options from?
There are a few choices for options trading in crypto. Some of the top platforms include Coinbase, Kraken, Bitstamp, Gemini, Binance, and Bitfinex.
All of these exchanges mentioned before offer Ethereum as one of their trading opportunities. Yet, one of the most significant considerations for choosing a cryptocurrency trading platform is the type of exchange and its usability.
On Binance, you need to activate your futures account and click on the Trades tab to choose “Options.” Afterward, you need to ensure to fund your future wallet. You can transfer funds from your spot wallet to your future account.
This process can be tedious and quite frustrating, especially for the rookie trader.
Yet, a more straightforward platform for Ethereum options is Logium. It provides viable crypto options since it can be used to short and long any token from Uniswap. In this case, the platform addresses the issue of decentralized finance and unleashes a truly free market for Ethereum derivatives. All transactions on Logium are peer-to-peer (P2P), completely transparent, accessible through its decentralized contract, and the platform does not store users’ assets.
Each platform has its advantages. Understanding how they work before using them is essential, so the trading journey is more accessible.