Options contracts overview
An option is a derivatives contract, giving the buyer the right but not the obligation to buy or sell the underlying asset at the preset price (strike price) on the expiration date. To obtain this right, the buyer pays the seller a fee called the premium.
Options fall into two categories:
Options fall into two categories:
- Call option: The buyer has the right to purchase the underlying asset at the strike price
- Put option: The buyer has the right to sell the underlying asset at the strike price
Unlike perpetual and delivery futures, options feature an asymmetric risk-reward structure. The buyer's maximum loss is the premium, while potential profit can be substantial. The seller caps their profit at the premium, while potential losses can far exceed the premium.
Components of an options contract
Underlying asset: The asset that both parties agree to buy or sell in a derivatives contract. We offer options contracts with Bitcoin (BTC) and Ethereum (ETH) as underlying assets.
Expiration date: The date on which the option contract expires. After this date, the contract is no longer valid.
Strike price: The price at which the option holder can buy the underlying asset (for call options) or sell the underlying asset (for put options) when exercising the option.
Types of options: Options can be classified in different ways. We currently support call options and put options, both in European style.
Premium: The price at which options are bought or sold. Exercise style: We support European-style options. Buyers can only exercise their rights on the expiration date of the contract and can't exercise early.
Options category: Options are categorized into in-the-money, at-the-money, and out-of-the-money depending on the relationship between the strike price and the underlying index price.
Expiration date: The date on which the option contract expires. After this date, the contract is no longer valid.
Strike price: The price at which the option holder can buy the underlying asset (for call options) or sell the underlying asset (for put options) when exercising the option.
Types of options: Options can be classified in different ways. We currently support call options and put options, both in European style.
Premium: The price at which options are bought or sold. Exercise style: We support European-style options. Buyers can only exercise their rights on the expiration date of the contract and can't exercise early.
Options category: Options are categorized into in-the-money, at-the-money, and out-of-the-money depending on the relationship between the strike price and the underlying index price.
Contract type |
最终结算价格S和执行价格K关系 | 实值/平值/虚值 |
Call |
S>K |
In-the-money |
S<K |
Out-the-money |
|
S=K |
At-the-money |
|
Put |
S<K |
In-the-money |
S>K |
Out-the-money |
|
S=K |
At-the-money |
Options contract mechanism
| Item | Details | |
| Contract type | Call and put options | |
| Exercise style | European style | |
| Contract Expiry (Applicable to both orderbook and OTC trading) | Same day, Next day, 3rd day, 4th day Same week, next week, 3rd week Same month, next month, 3rd month Same quarter, next quarter, 3rd quarter, 4th quarter |
|
| Underlying index | BTC-USDT index | ETH-USDT index |
| Contract value | 1 BTC | 1 ETH |
| Minimum order amount | 0.01 BTC | 0.01 ETH |
| Settlement currency | USDT | USDT |
| Minimum tick size (order book) | BTC: 5 USDT ETH: 0.2 USDT |
|
| Minimum portfolio size (OTC) | BTC: 1 BTC ETH: 10 ETH |
|
| Start time | 08:00 AM UTC+0 | |
| Settlement time | 08:00 AM UTC+0 | |
| Settlement price | The settlement price is the arithmetic average of the spot index price sampled every second during the 30 minutes before expiration. One data point is taken per second. If the spot index price at time T(n) = Index(n), then sum(Index) = {Index(1) + Index(2) + ... + Index(n)}, and Settlement price = sum(Index) / n |
|
| Settlement method | Cash settlement | |
| Trading hours | 24 × 7 | |
| Option contract naming rules | Options contracts are named in the format: Underlying asset Settlement currency - Expiration date - Strike price - Type Example: BTCUSDT-13DEC24-110000-C |
|
| Price limit | The price limit of an option is determined by two factors: 1. The portfolio margin risk matrix: for each minimum price movement (bucket) of the underlying asset, this defines the theoretical maximum and minimum values the contract can reach across three volatility scenarios (rising, unchanged, and falling). 2. The minimum options tick size (the minimum ask price must not be lower than the minimum tick size). |
|
Note: Above data and indicators are subject to real-time adjustments based on market conditions
Options mark price
The mark price represents the fair value of an options contract. The implied volatility (IV) of an options contract is calculated from the volatility curve derived from buyer and seller quotes on our platform and other leading exchanges. IV is then applied as one of the parameters in the Black-Scholes model to calculate the mark price.
The mark price serves as a reference price for traders. On the option chain, traders can monitor the spread between the buy or sell price and the mark price to inform their trading decisions.
Options margin
Options trading is currently available for users in portfolio margin mode.
Margin calculation:
- Portfolio margin mode calculates the overall risk of a derivatives portfolio via stress testing (based on the mark price and implied volatility of the underlying asset), concentration risk, and calendar spread risk. Under stress testing, if the derivatives portfolio contains hedged positions, the required margins can partially offset each other.
- For options, perpetual, and delivery contract orders, each unfilled order will calculate order margin separately.
- Initial margin = max(Worst case scenario + Roll shock + Delta shock + Decoupling margin, Minimum charge) + Derivatives order margin + Loan initial margin
- Maintenance margin = 0.8 × max[(Worst case scenario + Roll shock + Delta shock + Decoupling margin), Minimum charge] + Liabilities maintenance margin
Options order margin:
- Options buy order margin = min[max(Mark price - Minimum sell price, Order price - Minimum sell price, Minimum price movement), Order price] × Order amount
- Options sell order margin = max(Maximum buy price - Mark price, Maximum buy price - Order price, Minimum price movement) × Order amount
Options PnL calculation
Close PnL
Close PnL refers to profit and loss generated when closing positions.
Calculation:
Close PnL for buying call/put options = (Fill price - Average position price) × Filled amount - Fee
Close PnL for selling call/put options = (Average position price - Fill price) × Filled amount - Fee
Calculation:
Close PnL for buying call/put options = (Fill price - Average position price) × Filled amount - Fee
Close PnL for selling call/put options = (Average position price - Fill price) × Filled amount - Fee
Delivery PnL
Delivery PnL is generated upon option expiry. No delivery PnL will be generated if the option is not exercised.
Calculation:
Delivery PnL for call option = max(Delivery price - Strike price, 0) × Position size
Delivery PnL for put option = max(Strike price - Delivery price, 0) × Position size
Fee calculation
Fees for option opening, closing, and delivery are calculated as follows:
Transaction fee
Transaction fee = min(Taker/maker rate × Index price, Maximum transaction fee ratio relative to order price × Option trade price) × Option trade amount
Delivery fee
A delivery fee will be charged when exercising the option.Take call options as an example. If the underlying delivery price exceeds the strike price, the option will be exercised. The buyer gains the option profit and the seller is obligated to deliver. Both parties are required to pay delivery fees. Only unexercised options are exempt.Calculation:Delivery fee for call option = min[(Base delivery rate, Taker rate) × Index price, Maximum delivery fee ratio relative to option value × (Estimated delivery price - Strike price)] × Position sizeDelivery fee for put option = min[min(Base delivery rate, Taker rate) × Index price, Maximum delivery fee ratio relative to option value × (Strike price - Estimated delivery price)] × Position size
Note:
- Fee rates vary by user tiers.
- From 07:30 to 08:00 UTC+0 on the option expiration date, the platform calculates the estimated delivery price based on the BTC spot index price.
- The delivery fee per contract can't exceed 10% of the option value.
- There's no delivery fee for unexercised or daily options.
Liquidation fee
An extra fee applies to liquidation in options trading, with no additional trading fees charged.
The theoretical liquidation fee is calculated based on the mark price and implied volatility at liquidation to estimate the option price volatility and liquidation slippage. This value represents the estimated liquidation charge. The actual liquidation fee will not exceed your account equity.
Long takeover slippage
|
Long takeover IV slippage
|
Short takeover slippage
|
Short takeover IV slippage
|
|
| BTCUSDT | 0.30% |
25% |
0.50% |
25% |
| ETHUSDT | 0.50% |
25% |
0.60% |
25% |
Long liquidation fee = {Option mark price - min[max(0, Option mark price - Underlying asset price × Long takeover slippage), Option mark price (IV × (1 - Long takeover IV slippage))]} × Amount
Short liquidation fee = {max[Option mark price + Underlying asset price × Short takeover slippage, Option mark price (IV × (1 + Short takeover IV slippage))] - Option mark price} × Amount
Note: "Option mark price (IV × (1 - Long takeover IV slippage))" refers to the mark price calculated after shifting the current implied volatility up or down by a specified percentage.