Options are contracts that give you the right, but not the obligation, to buy or sell an asset at a set price before a set date.
Call vs Put
| Option | Right To | Bullish or Bearish |
|---|
| Call | Buy at strike price | Bullish (price goes up) |
| Put | Sell at strike price | Bearish (price goes down) |
Key Terms
| Term | Meaning |
|---|
| Strike price | Price at which you can buy/sell |
| Expiry | When the option expires |
| Premium | Cost of the option |
| In the money (ITM) | Option has intrinsic value |
| At the money (ATM) | Strike ≈ current price |
| Out of the money (OTM) | Option has no intrinsic value |
How Options Work
Buying a Call
BTC at $50,000. You buy a $55,000 call for $500 premium.
| BTC at Expiry | Your Action | P&L |
|---|
| $50,000 | Let expire | -$500 |
| $60,000 | Exercise | +$4,500 |
| $70,000 | Exercise | +$14,500 |
Buying a Put
BTC at $50,000. You buy a $45,000 put for $400 premium.
| BTC at Expiry | Your Action | P&L |
|---|
| $50,000 | Let expire | -$400 |
| $40,000 | Exercise | +$4,600 |
| $30,000 | Exercise | +$14,600 |
Buying vs Selling
| Buyer | Seller (Writer) |
|---|
| Risk | Limited (premium) | Unlimited |
| Reward | Unlimited | Limited (premium) |
| Cost | Pays premium | Receives premium |
| Best for | Directional bets | Income generation |
Crypto vs Traditional Options
| Factor | Traditional Options | Crypto Options |
|---|
| Expiry | Monthly/quarterly | Weekly/monthly/quarterly |
| Settlement | Physical or cash | Usually cash |
| Counterparty | Clearing house | Exchange or DeFi |
| Liquidity | Very high | Moderate |
Where to Trade Crypto Options
| Platform | Type | Available |
|---|
| Deribit | Centralised | BTC, ETH options |
| Binance | Centralised | BTC, ETH options |
| Bybit | Centralised | BTC, ETH options |
| Lyra | DeFi | ETH options |
| Opyn | DeFi | ETH options |
Common Strategies
| Strategy | What It Does |
|---|
| Long call | Bet on price going up |
| Long put | Bet on price going down |
| Covered call | Sell call against holdings (income) |
| Protective put | Buy put to insure holdings |
| Straddle | Buy call + put (bet on volatility) |
Risks
| Risk | Explanation |
|---|
| Theta decay | Options lose value daily |
| Expiry | Worthless if wrong direction |
| Low liquidity | Wide spreads on some exchanges |
| Complexity | Easy to misprice options |
Bottom Line
Options are powerful but complex. Start with simple long calls or puts on Deribit or Binance. Never sell options until you fully understand the risks. Theta decay means options are a depreciating asset — timing matters as much as direction.
This content is for educational purposes only. Not financial advice. Do your own research before investing.