Crypto options explained

Calls, puts, strike and expiry

A call gains value when the price rises above its strike price; a put gains when the price falls below it. The expiry is the date the option stops existing. An option that is not worth exercising at expiry ends worthless.

Most crypto options are European style: they can be exercised only at expiry, and they are settled in cash rather than by delivering the coin.

Buying versus selling

A buyer pays the premium and has limited risk. A seller receives the premium and takes the other side: limited profit, and a loss that can be many times the premium received. Selling options requires margin and can be liquidated like a futures position.

What moves an option’s price

Three things, beyond the price of the asset itself.

• Time: an option loses value as expiry approaches, all else equal.
• Implied volatility: the more movement the market expects, the more options cost.
• Distance from the strike: options far from the current price are cheaper and less likely to pay off.

How option fees are charged

Option fees are usually quoted as a percentage of the underlying asset’s price per contract, not of the premium, with a cap so that a cheap option is not charged more than a set share of its own price. Among the exchanges AffMiss has read, Bybit and OKX publish 0.02% maker and 0.03% taker, and Deribit publishes 0.03% for both with a cap of 12.5% of the premium.

Options held to expiry can also carry a delivery or exercise fee, which differs by exchange.

Where to go next

Common questions