This article was originally published here.
Binance, one of the biggest crypto exchanges in the world, has officially launched its Bitcoin (BTC) options trading platform on its futures.
more Options. https://t.co/XtOsL2uWY1
— CZ Binance (@cz_binance) April 13, 2020
After giving some hints at the beginning of the month about the event, on the morning of April 13, Binance has announced that its options trading app is for now limited to the mobile version. With options contracts, traders get the chance to either buy or sell on a given asset at a strike price that has been previously specified.
The American Version of the Derivative Being Offered
The offer at Binance is not for the European derivative’s version, but for the American one. Traders are able to exercise their rights of settling a contract at the strike price any time before the expiry date or on the actual date. For the BTC/Tether (USDT) options contracts, they must first transfer their USDT holdings from their spot wallet to their futures wallet. After, they must also choose an expiry date, which ranges from 10 minutes to an entire day.
Profitable or not?
In a note released to its traders, Binance says a premium with a fixed value must be paid in the beginning, which means the potential trading profits are going to be net and not include the value of the premium. Here are the exchange’s exact words on this:
“There is no guarantee that your options purchase will execute at a profit after the premium has been deducted. Most options purchases will not be profitable, but a minority will be very profitable. Please use at your own discretion.”
Other Exchanges That Launched Options Trading Products
In December 2019, the Malta-based crypto exchange OKEx has also introduced the options trading feature for only a few traders, after which, earlier this year, it has made a public launch for it. Furthermore, the Chicago Mercantile Exchange Group has too made the announcement that it’s planning to launch a BTC options trading product ever since September last year, saying there’s a high demand for it, especially in Asia.
Binance Is Becoming an All-in-All Crypto Platform
The exchange giant Binances seems to be expanding across all crypto-related sectors. Its CEO and founder, Changpeng CZ Zhao, said a quarter of Binance’s yearly profit is being invested to grow the company’s business portfolio beyond trading. Last year, the exchange made about $550 million in profits, so its expansion investments must be significant. Recently, the crypto market data aggregator Coinmarketcap.com has been acquired by Binance for $400 million.