GlossaryAdvanced
Crypto Options
A derivative contract granting the right, but not the obligation, to buy or sell a crypto asset at a set price.
A crypto option is a derivative contract that grants its buyer the right, but not the obligation, to buy or sell an underlying crypto asset at a predetermined price before or at a set expiry date, in exchange for an upfront payment (the premium).
Unlike a futures contract, an option buyer's maximum loss is generally limited to the premium paid, while the option seller takes on the corresponding open-ended obligation if exercised.
Examples
- A crypto option buyer's maximum possible loss is generally limited to the premium they paid.
- An option seller takes on the obligation to fulfill the contract if the buyer chooses to exercise it.