Every time while the Bitcoin market volatiles, many investors get to be liquidated and some others grab huge profits. Eventually, we found out the truth that barely investors can survive after waves came and out. As we all know, compared with investing in Bitcoins on the spot trading market, futures trading is capable of magnifying the gains based on the effect of its leverages.
To gamblers, it can be considered as the “fatal attraction”. Especially when the bull market comes, even you choose any major tokens to buy randomly, you can still earn from it. So, investors who own similar psychology like gamblers will keep holding the “So, why not Futures trading?” view. But they always ignore that the risk is also increased by the same leverages. Any careless operation may cause their account to be liquidated.
Even though, Futures trading still won the current market since the volatility of the Bitcoin price was sharp. In this case, the investors who did a good job FIRE, and the investors who lost only had to check McDonald’s Careers. However, some differences show up when things come into Bitcoin Options. For Options trading and Futures trading, even they are both derivatives with high leverages, and enable users to earn high profits with a low-budget, such as that Bitcoin Options on BitOffer naturally brings up a leverage which can be up to 2,000X, but it never pushes investors to be forced into liquidation because Bitcoin Options only takes the settlement price as the standards. No matter how the market fluctuates during this period, your options positions will never be influenced.
Then, which one will be your choice, Bitcoin Options or Bitcoin Futures? We can make a comparison to see which one is much more profitable when the market becomes extremely.
40X Payoff Cash out in 5 mins? How Does Bitcoin Options Work out?
Takes the market on April 5th as the example: The BTC/USDT market once surged to $6,993, then fell back to the level of $6,745. The Bitcoin price decreased by $248 within 5 minutes.
In the case that the Bitcoin price decreased by $248 within 5 minutes, and the change was -3.5%:
- A 5-mins Put Options contract could bring $248 as a payoff to investors, and the budget would only be $6. The return has reached 40 times.
- Futures contracts that short Bitcoins 100X only made the return reach 3.5 times.
It is obvious that Options trading is much more profitable when the market changes sharply. At the same time, its features of “0 Fees, 0 Margins, No Liquidation, and No exercise” make BitOffer Bitcoin Options much more profitable but always less risky than futures trading.
Besides, Bitcoin Options is also the best hedging tool ever, isn’t it?
Yes, it is.
Besides the normal investors, miners also can use Bitcoin Options to protect their assets from losing value when the market plunges. Nowadays, the budget of mining became more and more expensive, plus the factors of hashrate scramble and the Bitcoin price volatiles, the return of miners becomes unstable. Moreover, the upcoming halving and the upgrades of the miner machine enhance the budget of mining. No one can let you have his words that the Bitcoin price can be always more than the budget. In this case, Bitcoin Options is also the first choice of the insurance to the miners.
How Does Put Options Hedge the Risk when the Bitcoin Plunges?
For example, the Bitcoin price now is $10,000.
If it rises to $11,000, the spot trading market brings $1,000 profit for each Bitcoin holding.
If it falls to $9,000, the spot trading market brings $1,000 loss for each Bitcoin holding.
However, if you buy a put options contract to hedge, the budget would be $20. When the Bitcoin price decreases by $1,000, the spot trading market brings you $1,000 loss for each Bitcoin holding, but at the same time, you will get $1,000 payoff for each put options contract you have bought. In this way, your account will save the loss when the Bitcoin price plunges, and that is how the Put Options hedge the risk.
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