What is Binance Options? Related information from A to Z
Many people surely still have many questions and doubts about what Binance Option is, right? Considered a subsidiary of the parent company Binance, Binance Option also brings many new features that are extremely attractive and effective when trading. If investors do not know the relevant information about Binance Option, this article is for you. Follow Cryptobnb to follow all the useful information about American options trading – Binance Option.
Related information about Binance Options
What is Binance Options?
What is Binance Options? is known as an American form of option that allows you to exercise this option any time you want before the expiration date. Binance Options is an option contract that helps to make cash payments as quickly as possible, so users do not need to transfer any underlying (physical) assets. .
Unlike other traditional option types, Binance options have the shortest expiry times, typically ranging from 5 minutes to 1 day. The Binance option has only one price to exercise, which is equivalent to the other contract prices of the Binance futures contract. So it can also be said that Binance Option always breaks even.
Learn What is Binance Options?
Besides, for users, you also only become buyers of Binance Options, because currently Binance is the only issuer (option seller). Therefore, Binance Options does not have an order book. As an option buyer, the biggest and most influential loss in an options contract is the option premium you pay. In this case, your breakeven point is exercising which is the +/- option premium (depending on whether it's a call or a put).
Binance Options Contract Details
| Option contract | BTCUSDT | ETHUSDT | XRPUSDT | BNBUSDT | LINKUSDT | LTCUSDT |
| Base assets | BTCUSDT Binance Futures | ETHUSDT Binance Futures | XRPUSDT Binance Futures | BNBUSDT Binance Futures | LINKUSDT Binance Futures | LTCUSDT Binance Futures |
| Minimum contract size | 0.001 BTC | 0,001 ETH | 0,1 XRP | 0,01 BNB | 0,01 LINK | 0,001 LTC |
| Maximum contract size | 20 BTC | 200 ETH | 200.000 XRP | 2.000 BNB | 2.000 LINK | 20 LTC |
| Exercise price | Latest price of BTCUSDT Binance Futures | Latest price of ETHUSDT Binance Futures | Latest Price of XRPUSDT Binance Futures | Latest Price of BNBUSDT Binance Futures | Latest price of LINKUSDT Binance Futures | Latest LTCUSDT Binance Futures Price |
Extremely Important Disclaimer About Binance Options
Option fee/Interest
The initial options premium is deducted from the Binance Futures wallet balance . Then the system only calculates the interest. In some possible rare cases, an option premium withdrawal can also result in positions being unexpectedly closed. The futures contract is processed. So make sure you have enough margin on your future wallet balance before placing an option order.
Disclaimers
Note that in order to generate a net profit when trading options, the profit must also be several times greater than the options premium. The profit will also range from 0 to infinity and the option insurance cost is considered a fixed value that you paid before making the trade. Therefore, for covered fixed cost options, the initial profit is not limited. The net profit that can be derived from options trading is (profit minus the option premium).
Price
All operations performed as above will be charged at market prices. There is no guarantee that the price displayed on the screen will be the most accurate one you will run, although currently market prices are often very close together.
Price disclaimer
The price of small spreads or orders to be executed under a “normal market condition (low volatility market) is virtually unchanged and they are always the same, but for orders of varying degrees and large volume or orders are executed under highly volatile market conditions, prices may vary greatly based on actual order execution.
Risk warning
Nothing can guarantee that your options trades will be profitable after the options premiums have been deducted. Also, not all options trading will make you profitable. Which market to enter and how is at your own discretion.
Some notes to know before learning Binance Options
Notes to know about Binance Options
- CALL: Call option (you will profit when Bitcoin price increases).
- PUT: Put option (you will make a profit when the Bitcoin price drops).
- Premium: The amount paid to purchase an options contract, also known as the option premium.
- Actual Price: The price at which you buy the option contract, also known as the strike price.
- Closing price: also known as settlement price. This is the option strike price.
- Expiration Date: The length of time the contract expires.
- Break Even Price: The price at which you will break even.
How to calculate profit and risk on Binance Options
Certainly, when learning about what Binance Options is, we need to understand the profit and risk that can be received from this trade. Compared to binary options products, Binance Options will also have many similarities. The reason for this is probably due to the short-term support. However, Binance believes that they are not the same as binary options because Binance Options does not have a fixed payment structure. With Binance Options, your earnings are unlimited, the only risk is the option premium.
Detailed instructions on how to calculate profit and risk when trading with Binance Options
Buy Call
When you place a buy call, expect a price higher than the current price. It will be profitable if it meets your expectations. The price is 9900 USDT with the premium option (Premium) and the option premium is 140 USDT (you predict the BTC price will increase after 8 hours).
So the equilibrium price is 9900 + 140 = 10040. USDT. That means if BTC goes up to the level of 10,040 USDT, you will not lose anymore. If BTC exceeds 10,040 USDT and reaches 12,000, you will earn 11,00010040 = 960 USDT. If Bitcoin does not rise as expected or even falls below the call purchase price (strike price), you will lose the option premium of 140 USDT.
Buy Put
When you are executing a buy order, you predict that Bitcoin will fall. It will be profitable if it goes as you predict. Let's say you buy a put size of 1 BTC for 1 hour (1H), strike price is 9900 USDT with an option premium of 40 USDT (you predict the price will fall in 1 hour).
So the equilibrium price is 9900 – 40 = 9860 USDT. You get the balance and make a profit. when the Bitcoin price as predicted had a fall to the level of 9860 USDT, the loss you suffered was 40 USDT, which is also equivalent to the previous option premium you paid.
Detailed instructions on how to use Options on Binance quickly
Let's keep track of the steps that need to be taken to easily use Binance Options.
Step 1: Download the Binance App
You need to download the Binance app first to be able to use this Binance Options app right away.
Step 2: Open a Binance Futures account
Select Options
To trade options, you need to open a futures account. To open a futures account, first go to Funds > Select Futures. Finally, check the box “Futures Trading Guide” then click the “Open Futures Account” button as shown below.
Step 3: Executing options contracts at Binance Options
Transfer money to Future wallet
Before trading, make sure you have funds in your futures wallet. Click the arrow button as shown below. Finally, enter the amount you need to transfer from Spot wallet to Future wallet , then press the confirm button and you're done.
Transfer money to wallet
Choose an expiration time
You can choose time periods such as: 10 minutes (10 minutes), 30 minutes (30 minutes), 1 hour (1H), 8 hours (8H), 1 day (1D). It will increase or decrease.
For example, if you predict the price will change in 30 minutes, choose the 30 m square.
This option expires
Choose contract size
Enter the contract size in “SL (BTC)”. The larger the size, the higher the premium you pay. Note: the longer the expiry, the less contract size you can buy.
For example, I have 44 USDT here in the framework of 10 million, I can buy upto ~2.9 BTC. But on 1D frame I can only buy ~0.19 BTC. Option fees also depend on the price of BTC. Now that you have selected the timeframe and size, all you have to do is click the “Buy” or “Buy Put” button.
Double check the information is correct
For example, predict BTC price will drop in 1 hour, then choose: 1H and “Buy deal”. Otherwise, if you believe it, go upstairs then “Buy Calls”.
Confirm Buy Call or Put
You click confirm after the buying and selling information is displayed.
Confirm and close the transaction
Here, an example for you to understand in more detail, I buy BTC Put 8H with a strike price of 9849 USDT. In other words, I think the price will be below this price within 8 hours.
Note: Currently, when confirming a buy order or a buy order decrease, the breakeven price is still displayed incorrectly. After buying, watch the outside position and you will see the breakeven price.
My breakeven price is 9710 USDT. This means that when Bitcoin reaches the price of 9710, I will not lose any fees. If the price is lower than 9710, I will start to profit.
If the price is not lower or even higher than the bid I made, I will only lose the premium (Premium).
Note: You can execute the contract ahead of time. For example, if you bought an 8H contract, but only 4 hours ago you made a profit, you can do so by clicking the pay button in the location area.
Some Binance Options specs you need to know
Specifications to know about Binance Options
Basic trading assets: BTCUSDT, ETHUSDT, XRPUSDT, BNBUSDT, LINKUSDT, LTCUSDT
Minimum contract size: 0.01 BTC
Strike Price: The strike price of the applied futures contract trade.
Option premium (premium): is the fee paid to buy an option
Expiry Date: is the expiration time of the contract Binance options expiration time: 5 minutes, 10 minutes, 30 minutes, 1 hour, 4 hours, 8 hours, 12 hours and 1 day.
Break-even price: breakeven price = strike price + option premium
Target price: the profitable price you expect to hit
Call option: order to buy call option
Place order: order to buy put option
Binance Options is Binary Options right?
To answer this question, you need to understand that a Binary Option (BO) is a form of predicting which direction an asset's price will move when it is bought up or down. If the price moves in the right direction, the player makes a profit, but if the price moves in the wrong direction, the player can lose the cost of the binary option.
Is Binance Options a Binary Options?
Binary options always have a house standing behind, this is an options trading platform. And when you play an option, you will be the player, and the dealer will be the dealer. The essence of binary options is a game between the dealer (exchange) and the player, this is the reason why many people think that the broker can manipulate the price to deceive players, they can make the price go up or down. at your disposal… the options are basically the same as “Gambling” with no difference. Luck determines the odds of a player winning or losing.
And options contracts are a form of derivative that will be very popular in the stock market. An option or offer gives its holder the right to buy or sell a certain amount of a commodity at a certain price at a certain time. Options are completely different because Binance options are simplified versions of traditional options, so Binance options are not binary options.
Distinguishing Binance Options from Traditional Options
In the market of traditional options trading, an investor can become an option buyer or an option seller. The option buyer now has the right to buy or sell the underlying asset at a predetermined price before expiration. An option seller is a party that is obligated to deliver the underlying asset to the buyer at a predetermined price.
Distinguishing Binance Options from Traditional Options Trading
What is in the case of Binance Options? Binance Exchange is the sole issuer of the product. For Binance Options, participating users can only be option buyers. Binance options users, unlike traditional options sellers, are not exposed to endless downside risk.
In this case, the maximum loss is the premium paid on the option contract. Since traditional options products often have different expiration times and strike prices, it is not surprising that hundreds of options contracts can be created from an underlying asset.
This market structure shows fragmented liquidity, as empty (losing) or about to expire contracts are extremely illiquid. Therefore, the contract negotiation incurs many costs and troubles in the implementation process. In contrast, the Binance options contract will have only a single strike price, which is the price of the BTCUSDT perpetual contract on the Binance futures contract.
Therefore, the user does not need to choose the actual price and expiry time. In all cases, the Binance Options contract is always at breakeven, which equates to no arbitrage when the market is volatile. In addition, traditional options contracts can also have a very long duration of up to 100 days or more.
However, the Binance option currently only supports timeframes from 10 minutes to 1 day. Sponsorship opportunities offer a unique opportunity. Unique for investors to trade in as little as 10 minutes, allowing users to use multiple trading strategies. more grumpy.
The profit and risk structure of Binance options also has many similarities with traditional options. For example, here's the revenue for call and sell options: Both show the same thing. If the price moves above or below the strike price, the option's rate of return will change accordingly. If the underlying price does not move from the actual price at expiration, the option will lose value. In both charts, the breakeven point is the strike price plus/minus the premium, depending on the call or put option.
Trading fees are regulated at Binance Options
In the case of Binance options, the strike price can be considered to be equivalent to the price of the BTCUSDT futures contract. As a result, the price to exercise can have a range of fluctuations consistent with the price of the underlying asset. That is why the premium for the option will also fluctuate. It is not directly comparable to other options currently available in Europe, which are quite distinctly designed and have fixed exercise prices.
Trading Fees at Binance Options
For example, suppose both options have a price. If the options are exercised the same way, the premiums for the options are comparable. Considering the total cost of options and the flexibility that options in the US offer, Binance Options would be the most logical choice. To illustrate, consider an example where some investors are looking to buy a BTC option at the current spot price of $6,875.
To be able to easily buy call options on Binance, an investor will have to pay a price of $140 in 24 hours with a strike price of 6875. At Deribit, an investor will have to spend $96.66 to buy a call option on Binance. can get an 18-hour option and then buy $145.02 in 36 hours.
Transaction costs between Binance Options and other Cryptocurrency Options
Binance options can be rotated at any time, while Deribit options must be held until expiration. Options on the market, the margin will be around $20, or 0.3%. Users can raise Binance options without paying any extra fees like options fees. Users of other crypto options platforms should not accept any additional trading fees other than the paid option fees.
Detailed instructions on how to calculate Pnl profit and loss at Binance Options
To calculate what is the profit and loss of a Binance Options contract, we use the target price because we know that the target price is higher than the equilibrium price and the player will make a profit; otherwise the target price is lower than the equilibrium price and the player loses.
How to calculate specific profit and loss on Binance Options
How to calculate profit and loss of Pnl contract Buy call option with contract size of 1 BTC, contract duration is 10 million (minutes) with strike price of 45,906.96 USDT, call option premium is 237,901 USDT. With this contract option we have:
Strike price: 45,906.96 USD, Call price: 237,901 USD
Remaining price = Strike price + Call fee = 45,906.96 + 237,901 = 46,144.89 USD
Target price = Strike price + Spread.
Then enter 500 in the field with the target price so that we can calculate what the profit will be if BTC increases in price by 500 USDT. How much difference do you expect, then enter that number in the Target Price field to calculate
So, if BTC rallies by 500 USDT, the target price is = 45,906.96 + 500 = 46,406.96 USDT. At this point you already have a fee. in Pnl, it is +262.07 USDT. Likewise, continue the calculation with each BTC price increase to calculate profit and loss.
For example, if BTC only rallied +200 USDT and reached a price of 46,106.96 USDT, you would suffer a loss of 37,901 USDT (~38 USDT).
Reasons to choose Binance Options
Binance Options as we analyzed it is an easy-to-use custom product that is appreciated by many. Using this platform can simplify options trading to improve user experience and remove barriers to entry.
Since its inception, the options product has been well received by Binance, achieving a trading volume of more than $1 billion. This is an impressive number that everyone should pay attention to.
Why should you choose Binance Options?
Flexible and extremely responsive in the market
Binance Options is one of the reputable US options contracts that can be exercised at any time, any time before the expiration date. It is quite different from the traditional European-style options contract, which can only be exercised on the expiration dates. Extremely flexible and responsive.
Suitable for short-term trading strategies
Unlike other traditional options on the market, Binance Options currently offers short-term contracts ranging from 10 minutes to 1 day, so investors can increase their options if they just want to trade for a short period of time.
Easy to use platform
It will be much easier for users of this platform, they don't have to spend time and effort choosing the price and expiration date. Instead, Binance options contracts will be designed with a single strike price; Equivalent to BTCUSDT on Binance Futures. The need to constantly track multiple expiration dates and different fitness rates.
Easy to use platform
Vast, unlimited liquidity environment
Binance is the sole issuer and main liquidity provider for this product. This also means that options contracts traded at Binance will always be available, and users will certainly be able to receive offers at any time when making trades here.
Very favorable trading options fees
There are no additional costs for Binance Options users other than an options contract opening cost, including payments on the Binance Exchange which can be a more cost-effective option for investors. .
Limit the risks of liquidation leverage
Binance Options currently offers a fairly high leverage ratio so that users can more easily execute transactions of the underlying asset of the contract at a fraction of the previously specified costs. In addition, users will not have to worry too much about the liquidation risk often associated with leveraged trades. Loss of Binance Options users has been limited from the start.
Above is all the basic as well as in-depth content about Binance Option. Surely after knowing this information, investors can already know what Binance Option is, right? Join now and try this platform experience if you have a need.
