Options trading is a versatile financial strategy that allows traders to speculate on or hedge against price movements in various assets. This guide explores the fundamentals of options contracts, their key components, and how they differ from futures trading—specifically within the OKX ecosystem.
Understanding Options Contracts
An Options contract is a derivative instrument granting the buyer the right (but not the obligation) to buy (Call option) or sell (Put option) an underlying asset at a predetermined strike price by a specified expiration date. The buyer pays a premium to acquire this right.
Key Features:
- Buyer’s Flexibility: The buyer may exercise the option if profitable or let it expire worthless.
- Seller’s Obligation: Sellers must fulfill the contract if the buyer exercises it.
Essential Elements of Options Trading
1. Underlying Asset
The asset tied to the contract (e.g., BTC/USD or ETH/USD for crypto options).
2. Expiration Date
The deadline to exercise the option.
3. Strike Price
The fixed price at which the asset can be bought/sold.
4. Contract Types
- Call Option: Right to buy the asset.
- Put Option: Right to sell the asset.
5. Exercise Styles
- European Options: Exercisable only at expiration (used by OKX).
- American Options: Exercisable anytime before expiration.
6. Option Premium
The cost paid by the buyer to acquire the option.
Moneyness: ITM, ATM, OTM
| Contract Type | Condition (S = Settlement Price, K = Strike Price) | Classification |
|---------------|---------------------------------------------------|----------------|
| Call Option | S > K | ITM |
| | S < K | OTM |
| | S = K | ATM |
OKX Options Trading Specifications
| Feature | BTC Options | ETH Options |
|-----------------------|-------------------|------------------|
| Contract Size | 0.01 BTC | 0.1 ETH |
| Settlement Coin | BTC | ETH |
| Tick Size | 0.0001 BTC/ETH (<0.005) / 0.0005 BTC/ETH (>0.005) |
| Expiration Cycles | Daily, Weekly, Monthly, Quarterly |
| Trading Hours | 24/7 |
Options vs. Futures: Key Differences
| Aspect | Options Trading | Futures Trading |
|-----------------|------------------------------------------|--------------------------------|
| Obligation | Buyer has rights; seller has obligations | Both parties are obligated |
| Margin | Seller posts margin; buyer pays premium | Both parties post margin |
| Risk/Reward | Buyer’s loss limited to premium; seller’s loss potentially unlimited | Unlimited gains/losses for both |
Minimum Capital Requirements
| Scenario | Minimum Requirement |
|------------------------------------|---------------------|
| Multi-currency account | 10,000 USD |
| Portfolio margin account | 10,000 USD |
| Simple options trading | None |
Fees and Account Modes
- Fees: Refer to OKX’s Fee Schedule.
Margin Modes:
- Isolated Margin: Separate per-position margin (ideal for option buyers).
- Cross Margin: Shared margin pool (benefits margin offsetting).
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FAQs
1. Can I trade options with stablecoins on OKX?
Yes, stablecoins like USDT/USDC can be used as margin in Portfolio Margin mode.
2. How are OKX options settled?
Cash-settled in BTC/ETH based on the final index price before expiration.
3. What’s the contract multiplier for BTC options?
0.01 BTC per contract (e.g., 1 contract = 0.01 BTC).
4. Are OKX options American or European-style?
European-style (exercisable only at expiration).
5. Is there a position limit for options?
Yes, refer to OKX Position Limits.
For further details, visit OKX’s Options Trading Guide.
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