Hedge and Protect Gains with ETH Options
An option is a financial contract that gives the holder power (without commitment) to buy and sell an asset on a stipulated date at a specific price. Bybit has two primary ETH options: call and put options. The call option (bullish) gives holders the right to purchase a certain amount of ETH on a specified date at a predetermined price. On the other hand, a put option (bearish) gives holders the power to sell a given amount of ETH on a specified date at a fixed price.
The major factors that affect the price of an option are the price of the underlying asset, the time premium, the buying or selling price, and implied volatility. The price of a call option appreciates with an increase in the value of the underlying asset. Equally, the price of a put option depreciates with a decline in the value of the underlying asset. Options offer investors risk-reduction strategies, cost-effective ways to long or short the market with less downside risk, and more flexible and complex methods, like spread and combinations that are potentially lucrative in various market conditions.
Bybit is the first crypto exchange to list and trade USDC options and launch USDC-margined ETH and SOL options. If you expect high price volatility from The Merge, you can leverage Bybit’s USDC-Margined ETH Options to speculate or hedge and use it as a risk management tool.
Chicago Mercantile Exchange (CME) plans to introduce ETH futures options on September 12, 2022, which shows heightened interest in cryptocurrency derivatives products. Unlike the CME’s ETH options, Bybit’s USDC-denoted ETH options will follow its regular settlement and distribution process based on the dollar value of the PoS coin. Bybit has assured its options traders that it will not enact changes on the strike prices of ETH options in case of forks. This entails options listed before and after The Merge.
To learn more, check out Bybit’s detailed guide on ETH options.