Popular cryptocurrency exchange OKEx has rolled out its ether options, allowing investors to use these derivatives to enhance their trading strategies using the platform.
According to an announcement published by the exchange, it is also donating 1,000 ETH, worth $243,000 at press time, to its ETH/USD Options insurance fund, in a bid to minimize clawback risk. OKEx is known for its derivatives portfolio, which has stood out because of the volumes traded.
In its announcement OKEx details that it has been leading the industry in terms of derivatives trading volumes. Its offering includes cryptocurrency futures and perpetual swaps for top cryptocurrency like BTC, ETH, and others. It also noted plans to launch EOS/USD options
Options are derivatives based on the price of the underlying asset. Options contracts offer the buyer and options to buy or sell the underlying asset, depending on the type of contract their purchase. They differ from futures as if the holder is not required to buy or sell the asset if they choose not to.
Traders can either buy call options, allowing them to buy the asset at a specific price at a specific time or put options, allowing them to sell the asset at a specific price at a specific time. Ether options can be used to hedge against spot market losses over price drops, for example, if a trader buys put options while holding ETH.
CryptoCompare’s March 2020 Exchange Review shows that OKEx topped the derivatives market that month with a total trading volume of $161 billion. March was notably the month in which the crypto market endured a crash that saw the price of bitcoin nearly halve in less than a day, which has since been dubbed ‘Black Thursday’.
Commenting on OKEx’ new ETH/SD options offering the firm’s CEO, Jay Hao, said:
The launch of the ETH/USD options provides our users with more trading tools to fulfill their needs of executing different trading strategies. Based on the success of the OKEx BTC/USD options, we are confident to bring users a better options trading experience.
Hao added that OKEx will “never stop innovating” in a bid to provide users with “one-stop trading services.” Per the cryptocurrency exchange, a variety of derivatives being offered may help attract institutions and professional traders to the cryptocurrency space.
The mark prices of the exchange’s options are determined by the Black model on a real-time basis, and the final settlement price is generated via a time-weighted average of the underlying price over a period of time ahead of expiry.
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