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MoonXBT Options (Understanding Options)

Updated: Apr 24, 2022


What are options?



Options belong to the larger group of securities known as derivatives. A derivative's price is dependent on or derived from the price of something else. Options are derivatives of financial securities—their value depends on the price of some other asset. Examples of some derivatives include calls, puts, futures, forwards, swaps, and mortgage-backed securities.


If you buy an options contract, it grants you the right, but not the obligation, to buy or sell an underlying asset at a set price on or before a specific date.



What options do MoonXBT have?



MoonXBT is one of the few exchanges where investors can trade crypto options. Our range of options provides traders with a comprehensive suite of investment products to choose from, warrants, touch options, European spread options, and American standalone options.

Options belong to the larger group of securities known as derivatives. A derivative's price is dependent on or derived from the price of something else. Options are derivatives of financial securities—their value depends on the price of some other asset. Examples of some derivatives include calls, puts, futures, forwards, swaps, and mortgage-backed securities.

Options are a type of derivative security. An option is a derivative because its price is intrinsically linked to the price of something else. If you buy an options contract, it grants you the right, but not the obligation, to buy or sell an underlying asset at a set price on or before a specific date.


1. Touch Options

Touch options are an extremely rare and advanced type of exotic option. Previously, access to touch options would be almost impossible, but thanks to MoonXBT, anyone can now take advantage of this luxury trading product. The MoonXBT option suite not only allows access to such a rare investment instrument but also provides investors with two types of touch options, double one-touch and double no-touch. Both double one-touch and double no-touch fall into the binary options category. Binary options have a "yes or no" logic basis. Either they payout the full amount or return zero (and the buyer loses their premium).


Double one-touch options

MoonXBT double one-touch options give the holder a specified payout only if the price of the underlying asset touches or passes beyond either an upper or lower price barrier trigger level. Traders need to set the upper and lower barrier prices. If either is touched, the option validates an immediate return. Option return = order yield value. There is no return if the barrier prices levels do not trigger before expiration. The product cannot be closed before expiration.


Double no-touch options

MoonXBT double no-touch options give the holder a specified payout only if the underlying asset price remains within an upper or lower barrier level range until expiration. Traders need to set the upper and lower barrier levels. If the underlying asset price of the option did not touch either barrier level before the expiration date, the option pays a return. Option return = order yield value. The option expires without paying a return if the underlying asset price is greater than or equal to the upper barrier price or less than or equal to the lower barrier price at any time before the option's expiration date. The product cannot be closed before expiration.


Advantages of touch options

The binary nature of MoonXBT touch options makes them extremely simple to set up and execute, perfect for beginners. They are a highly effective way to trade in volatile and horizontal markets. They have a fixed risk, so traders do not have to worry about nasty surprises, as the maximum amount they are subject to losing in a single trade is the cost of the option and no more. Option life can be as low as one minute, allowing high-frequency trading so traders can generate fast profits in a short time. By far one of the most exciting investment products on offer. Test out MoonXBT's touch options today to see how much fun you can have while simultaneously generating almost instant profits.


2. Warrant Options

MoonXBT warrant options stem from American options but with optimized links, a simplified trading process, a more streamlined trading experience, and better liquidity. When purchasing MoonXBT warrant options, users only need to select the time, choose the call or put direction and enter the denomination to purchase differently priced option products, making the transaction process effortless and convenient.

Warrant options advantages

Low risk

When markets are volatile, spot leverage, perpetual contracts, and delivery contracts all carry liquidation risk. In contrast, option holders carry no risk of losing their positions through liquidation. Simultaneously, options traders have limited losses. The maximum loss is the cost of purchasing the option.

High Yield

Theoretically, there are no limits to the returns on options. For example, if the underlying price rises significantly, the call option will yield the same gain for the trader. Similarly, if a user purchases a put option, a significant decline in the underlying price will result in the same positive return for the trader.

Product Types


Call options

A call option gives the holder the right to buy a specific denomination of an asset at a set price at a certain point in the future for a premium. Holders of MoonXBT warrant call options can generate returns from rises in the underlying asset price. In addition, traders can exercise them in advance of the expiration date to ensure profits.

Put options

A put option gives the holder the right to sell a specific denomination of an asset at a set price at a certain point in the future for a premium. In addition, traders can exercise them in advance of the expiration date to ensure profits.


3. European Spread Options

There are two types of MoonXBT European spread options. Call spread options and put spread options. Unlike traditional financial European options, MoonXBT European spread options allow traders to close their positions early before expiration. The user only pays the option fee for the product, with no additional fees.


European spread option advantages


In addition to higher yields, minimal losses, and no liquidations, the pricing of European spread options is straightforward. Only a few simple parameters need setting. Investors can calculate the value of the option spread themselves by using a formula. European spread options exercise on the expiration date, making them relatively simple and easy to operate.

Types of European spread options


Call spread option

Holders of European call spread options can earn gains by setting a low strike price and a high strike price for a specific timeframe or point in time in the future. Then profit from the difference. The highest gains occur when the market index rises and touches the high strike price. European spread options do not have physical delivery. Traders holding call options can benefit from the price increase of the underlying asset.

Put spread option

Holders of European put spread options can earn gains by setting a low strike price and a high strike price for a specific timeframe or point in time in the future. Then profit from the difference. The highest gains occur when the market index falls and touches the low strike price. European spread options do not have physical delivery. Traders holding put options can benefit from the price decrease of the underlying asset.


4. American standalone options

MoonXBT’s American standalone options provide crypto traders with a more comprehensive and convenient trading environment. One space to meet all their investment needs. Our options come with the MoonXBT seal of a simple, swift, smooth trading experience with excellent liquidity. We provide two types of American standalone options, call and put. In contrast to European spread options, American standalone options come with greater flexibility and lower risk. Traders can exercise American standalone options rights at any time before and including the day of expiration. An American-style option allows investors to capture profit as soon as the asset’s price moves favorably.


Advantages and disadvantages of American standalone options


American options are helpful, as investors do not have to wait to exercise the option. They can exercise as soon as the asset's price rises above the strike price. However, American-style options carry a premium—an upfront cost—that investors pay and must factor into the overall profitability of the trade.

​​​Pros

Cons

Allows exercise at any time

Allows profits to be put back to work

Charges a higher premium

May miss out on additional option appreciation

Product Type


Call options

A call option gives the holder the right to buy an asset. Holders of MoonXBT American call options can generate returns from rises in the underlying asset price. In addition, traders can exercise them in advance of the expiration date to ensure profits.

Put options

A put option gives the holder the right to sell an asset. Holders of MoonXBT American put options can generate returns from price decreases in the underlying asset. In addition, traders can exercise them in advance of the expiration date to ensure profits.


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