The roaring arrival of blockchain and cryptocurrencies has already begun to emulate many of the strategies, rules, marketplaces, investment instruments and methodologies of the traditional financial system.
Newly introduced to the world of cryptocurrencies, investors are increasingly interested in entering the future options space. In fact, Binance and Bakkt, two giants in the blockchain industry, are announcing plans to launch the ability to trade futures options contracts for their millions of crypto users.
What are crypto future options?
For beginner investors or those that need a quick refresher, a futures option is effectively a contract allowing an individual to purchase a quantity of assets at a specific price (Strike price), to be delivered at a date and time in the future (expiry time).
Why use crypto future options?
The goal of futures markets is to resist and adapt or leverage market volatility. Asset producers and suppliers negotiate the contract with investors that have the option to bear the underlying risk or the reward. When engaging in crypto future options, investors have an opportunity to leverage the volatility of the marketplace, making cryptocurrencies an ideal and lucrative prospect.
Learning the essentials of crypto future options.
There are essential basic components to understand when investors engage in crypto future trading. Two types of options are available to select, a “call” or “put” option.
A “call” option provides the crypto investor with the right to purchase an asset at the Strike price. For an investor who chooses this option, they hope the price of their crypto assets will increase in value above the price of their Strike price, when the allotted time expires.
A “put” option provides the holder with the right to sell an asset at a negotiated and predetermined price. For investors who choose the “put” option, they are hoping that that the exact opposite will take place.
However, it is important to note that with cryptocurrency future options, the contract must be settled, regardless of the assets final price after expiry. This can lead to high risk for the holder or investor. Also, the value lies in the ability to potentially make multiples on a single investment, but only if the option has been bought.
Additionally, the price of purchasing an option is referred to as a “premium” and is deduced by a variety of factors, such as Strike price, current price, expiry times and market volatility.
How do I track my crypto future options and assets?
When engaging in crypto future options, it is imperative that investors have an organized portfolio, a well-thought plan and the courage to execute. But tracking cryptocurrency is already difficult, and when adding the burden of future options tracking, its complexity increases tenfold.
Many investors, leading crypto companies and blockchain businesses use advanced software to help them track and manage their cryptocurrency portfolio of accounts. If you need to track crypto future options for trading, software such as Blox, allows any investor or businesses to sync their crypto wallets, assets and portfolios with an auto-sync engine that immediately fetches and aggregates your complete historical records across all exchanges and sources of crypto activity.
Software does an excellent job at working behind the scenes to capture your entire financial picture and continuously update the user with the necessary information in real time. Investors need to always have direct access to view their asset performance, it’s what enables them to make key decisions on investments.
When using the right software, tracking and managing the performance of your crypto future options can be easy and doesn’t require a personal trader or cluttered reporting dashboards.
Where to buy crypto future options?
This new investment tool is gaining in popularity, but the demand for it is still relatively low in comparison to traditional cryptocurrency trading methods. Several online providers exist that allow their customers to more easily purchase crypto futures. Additionally, investors can look if their current exchange has their own future options offering.
But if not, here are a few service providers for crypto futures, such as, CME Group, Crypto Futures Options, BitMex, TDAmeritrade, Kraken Crypto Exchange and more coming very soon.
In early February, 2020, Binance, a top global crypto exchange, announced they will be releasing a new “Cross Collateral” feature to allow users to trade futures contracts by leveraging assets stored in their Binance accounts as collateral.
What is next for crypto future options?
The world of finance has many different strategies, plans and moving parts. What you see here is just the essential basics to keep investors informed. When the demand for crypto future options grows, is when more features and advanced options will become available, giving investors even more lucrative opportunities.
The cryptocurrency marketplace and investors are always looking into the horizon for what is next. The potential of crypto technologies will be fulfilled only through government regulation to allow mainstream crypto adoption. As the industry matures, it will continue to mimic and integrate the best parts of the traditional financial ecosystem into blockchain and improve it for the crypto space.
There are many more exciting changes that are destined to arrive soon.
Are you ready to start tracking and managing your assets?
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