Feeling bullish? Buy a Call option.

[Tristian]

f 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 $6,000 on 26 June 2020
You can buy a Call for 1 BTC with Strike Price at $6,000, Settlement Date on 26 June 2020
The cost for making this position will be 1,211.07 SP$ (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 $7,211.07‬ (6,000 + 1,211.07)
The higher BTC trades above your Breakeven Price at $7,211.07 at Settlement Date, the greater your profit. Technically, your profit is unlimited
However, if BTC trades below $7,211.07 , your maximum loss will be limited to your Premium Payable (1,211.07 SP$), even if BTC goes to $0


What are your thoughts on Call Options and Options in general?

 

[Bennett]

What are your thoughts on Call Options and Options in general?

You run the systemic risk of a trading platform failure

Whether it be accidental or intentional, if the platform (exchange) you trade on folds, you lose money regardless of the current price and the direction it is headed. This risk is negligible in case of regulated exchanges like CME, NYMEX and their likes, the ones that are trading derivatives. However, with cryptocurrencies, it is something that you should always be aware of, actually, be afraid of (apart from outright price manipulation by the platform of your choice). Put differently, your bitcoins are yours only if they are in your personal wallet (read, it is you who holds the keys from it)

 

[Waylon]

You run the systemic risk of a trading platform failure

Whether it be accidental or intentional, if the platform (exchange) you trade on folds, you lose money regardless of the current price and the direction it is headed. This risk is negligible in case of regulated exchanges like CME, NYMEX and their likes, the ones that are trading derivatives. However, with cryptocurrencies, it is something that you should always be aware of, actually, be afraid of (apart from outright price manipulation by the platform of your choice). Put differently, your bitcoins are yours only if they are in your personal wallet (read, it is you who holds the keys from it)

Well, thats with every platform to be honest. I agree that it is an added risk but, with crypto being legal in a lot of countries now. Its easier to have a fair trail against them in case of gross negligence. Earlier, they could just say "oops, we got hacked and lost all the coins" and dissolve without any course of action taken against them. Now, its not the case. Regulation certainly helps.

 

[Bennett]

There's another thing about derivatives (options and futures alike)

Futures contracts as well as options have expiration dates. This is kinda obvious, but when you feel it with your skin in the game and your money on the table, it feels totally different (I've been there). The point is, if the price of the underlying asset doesn't move much, you will still be losing money, i.e. the premium you paid to the seller of a futures or options contract. Simply holding a certain amount of cryptocurrency is a total win in this case -- you don't owe anything to anyone, and don't have to worry about rollovers and similar stuff

Well, thats with every platform to be honest. I agree that it is an added risk but, with crypto being legal in a lot of countries now. Its easier to have a fair trail against them in case of gross negligence. Earlier, they could just say "oops, we got hacked and lost all the coins" and dissolve without any course of action taken against them. Now, its not the case. Regulation certainly helps.

 

[Waylon]

Think last week was a great time to buy call option for BTC. I missed it as I was unsure which way BTC was heading. ETH on the other hand!!! Amazing week.

 

[Junior]

I really enjoy trading Futures and I've been looking into options, but haven't quite decided to try yet. It seems more risky, eventhough you know what the maximum loss can be...

 

[Waylon]

There are a lot of similarities between futures and options. So, that gives you a head start. Check out Sparrow Exchange. They have a much simpler UI to accommodate new traders to get into Options. Also have a blog to help you get started as well. Good luck.

 

[Legacy]

Think last week was a great time to buy call option for BTC. I missed it as I was unsure which way BTC was heading. ETH on the other hand!!! Amazing week.

Confusing for me to be honest, I know it makes sense and I understand why people prefer to do this because it ensures nothing is stuck at the settlement date, you win or lose, but I'd rather just make bets on Bitcoin price if I want to bet (which I don't).

Freebitcoin actually has great options, you put yr money in there for a settlement date on price, and you win other people's money who bet on losing price.

 

[Ulises]

yes, that right, this week crypto is on fire,and the most interesting here it seems BTC have decoupled from stocks,with ETH leading the crypto movement,It seems that the BTC dominance has diminished again.However about data i've read,volume is still not convincing,but the fact,its not too bad because we are still in the big consolidation range.

 

[Bennett]

Ethereum has 10x the volume of BTC in the ast 24hrs but both doing good respectively. Another week where buying calls would have been amazing. Lets hope the trend continues.