Binance has officially announced the launch of its Options Trading on 13 April. However, the feature will be currently available only on the exchange’s mobile application, as per the official statement. The prominent crypto exchange had announced its plans to support Options trading earlier this month through “testflight leaks.” The screenshot attached to the tweets hinted at a prototype for trading BTC/USDT [Tether] options contract.
With Binance Options, users will be able to buy or sell the underlying asset at a predetermined price, either before or at a certain date. In Binance’s case the underlying asset, for now, was only BTCUSDT and will provide a lower entry barrier and flexibility. The exchange clarified that it was an American style Options and added that it would allow traders to execute contracts any time before the expiry date. However, they offer a shorter time frame compared to traditional options, ranging from 10 mins to 1 day.
“On Binance Options, traders can only be a buyer, rather than as a seller as Binance is the only issuer. Therefore, there is no order book on Binance Options. The options will be exercised when traders “settle” (also known as exercise) the options any time before the expiry date or when the options expire.”
Thus, a maximum loss incurred by the trader would be the premium paid for the options. The minimum contract size was noted to be 0.001.
Bitcoin has been a prominent choice among the crypto asset for trading futures and options. With Binance’s entry into the Options realm and looking at its client base, the top positions of BTC options exchanges like Deribit and FTX could be challenged. Binance recently entered the Futures space and managed to gain the top spot in terms of volume traded as of 12 April with $2.2 billion.
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