Options

Options

Technical Indicators • Price Action • Chart Signals

derivative contracts with defined risk and flexible strategies

Options are derivative contracts that grant the holder the right—but not the obligation—to buy or sell an underlying asset at a specified strike price before or at a set expiration date. In crypto and traditional markets alike, options are leveraged tools used for hedging, speculation, and income generation. There are two main types: call options (right to buy) and put options (right to sell). Options strategies require knowledge of premiums, volatility, and timing—making them powerful but complex instruments.

Use Case: A trader holding a large amount of ETH buys put options as insurance against a short-term decline, allowing them to lock in a minimum exit price while maintaining upside exposure.

Key Concepts:

• Call Option — Gives the right to buy the underlying asset at the strike price before expiration
• Put Option — Gives the right to sell the underlying asset at the strike price before expiration
• Premium — The cost paid to buy the option, representing the maximum loss for the buyer
• Implied Volatility — A measure of expected future price movement, heavily impacting option pricing
• Derivatives — The broader category of financial contracts options belong to
• Perpetual Futures Markets — Alternative leveraged instrument with different risk profile
• Hedgers — Traders who use options to protect existing positions
• Market Maker — Entities that provide liquidity in options markets

Summary: Options are versatile contracts that enable market participants to hedge, speculate, or earn income with defined risk. While institutions use them for sophisticated strategies, retail traders must understand risk-reward dynamics and volatility metrics before deploying capital in options markets.