00:00Welcome back to Decentralized News. In today's video I decided to make the focus for this one
00:08all about options trading. So the intention here is to give you a really in-depth full guide on
00:17what crypto options trading is all about. So please give us a like and a subscribe and also
00:24don't forget to check out the links in the description. So let's look at what crypto options
00:32are all about because this is a tool that some traders use to help reduce risk in trading portfolios
00:42and also some other sophisticated trading strategies that actually have potential to protect
00:48traders from sort of missing out when especially when they're looking to catch market bottoms. So
00:59crypto trading as it is can actually be rather confusing for a lot of people. We've done many
01:06articles just looking at the different types of trading, the risks associated with trading etc
01:12which you can always check out on our main site. But with the options trading itself you know for
01:19some people it can be like I said a little bit confusing especially when you think about just
01:24the different types of derivatives out there. But for traders who are looking to sort of hedge risk
01:30for on a long or a short trade this sort of a derivative is actually quite a powerful tool.
01:39I personally don't trade any derivatives by the way but the mechanics of our options trading are similar
01:45in both stock markets and crypto markets. So a stock or crypto option essentially is a contract
01:53that would give you the right but not the obligation to buy or sell a specific asset at a specific
02:02time. So American options for example provide that right within a given time frame and when we look at
02:12European options they can only be exercised on a specific expiration date. So there's what we call
02:21a call option contract which is a buy a right to buy essentially and you also have a put option contract
02:30which is the right to sell. So options trading is essentially how investors buy and sell these
02:38contracts in an open market and since there isn't an obligation like I said to buy or sell this type of
02:47trade is fundamentally seen as a way to reduce risk. So but that's not to obviously say that
02:56every option trade is risk averse because they do carry risks with options trading strategies as well.
03:03You either actually pay someone to take on a risk for you or you can get paid out on someone else's risk.
03:13So they also allow you to speculate on the future price of an asset while hedging your potential losses as well.
03:23So the different platforms I can think of bit.com for example it's one of the sort of world or most popular crypto options markets out there.
03:36I've done an extensive review of bit.com on decentralized news so you can go check that out.
03:43They do offer BTC, ETH and also BCH options and they do get both retail and institutional traders on the platform.
03:54So far the most popular options are BTC and ETH. Bit.com actually did pioneer BCH pairs in 2021
04:05and I think Roger did do a tutorial on his channel, Roger V, who's well known for being like a proponent of the Bitcoin cash ecosystem.
04:15He actually did a, I think months ago, a tutorial on his channel about options on bit.com.
04:26And Derebit also introduced Sol Pays, Solana in 2022.
04:35So crypto options, the people that really like our proponents believe that the market should adopt a more mainstream pays
04:43to sort of provide ample hedging and investment opportunities as well.
04:50So let's look at how crypto options differ from traditional markets.
04:54So there are minor differences, even though I did say earlier, they're pretty much the same between when we look at crypto options and stock options.
05:03First, crypto markets obviously do trade 24-7, unlike stock markets, which close on weekends.
05:12Another difference is premiums.
05:14And because obviously implied volatility is essential in pricing options, crypto options can be costly.
05:21On the other hand, higher volatility can also increase potential profit.
05:28So this is one thing to really keep in mind.
05:33You also have to think about inversed versus USD denominated options.
05:39So inversed options are quoted in the token, whilst USD denominated are quoted in stable coins due to the legacy reasons in the crypto space.
05:49So that's pretty much if you think about options and call options, put options and all of this sort of stuff.
05:59Like I said, this is a technique used typically to manage risk.
06:03If you want me to go a little bit more in-depth into crypto options trading, then let me know.
06:08I've got somebody on my door, so I've got to go.
06:12But let me know and I can do a really full-on guide so we can kind of just look into how you can actually manage risk with options.
06:20Other than that, check our links in the description.
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