Options Market

Understanding the Options Market

The Options Market is a public platform where traders can buy or sell digital currencies at a predetermined price and time. It provides cryptocurrency traders with the opportunity to engage in options trading. Key terms commonly used in this market include call/put options and strike price. Call and put options are essentially opposite in nature. In simple terms, call options can be compared to buy orders, as they involve a predetermined price and date.

Traders in the options market typically purchase call options when they anticipate that the price of a tracked asset will increase in value. Conversely, investors choose to sell calls when they have a bearish outlook on the market.

On the other hand, put options represent sell orders, indicating the option holder’s intention to liquidate their position. The predetermined price at which the option can be exercised is referred to as the strike price. It is important to note that the options market operates under either American or European option rules.

In addition to the aforementioned terms, options traders must also familiarize themselves with other concepts such as Greeks. Greeks are symbols that help outline the risks associated with options trading. For example, the delta symbol indicates the change in the price of a tracked asset in relation to a one-dollar movement.

Theta, on the other hand, is used to measure the impact of time on the price of an option. It is often referred to as the time decay of an option. Gamma is another significant symbol in the options market, representing the change between an option’s delta and the price of a tracked asset. Other Greeks commonly used in the market include vega and rho.