Here are some benefits of Options Trading, especially in a volatile market like Crypto:
Leverage and limit risks while getting higher potential returns - Option trading is very attractive for small pocket traders. By taking position in options, one can reduce the cost significantly.
It’s Monday. BTC @ 10k
You buy a put for 1 BTC @ 9k expiring on Friday for $100
[if BTC falls below 9k, you can force someone to buy your BTC at 9k]
Wednesday, BTC flies up to 13k. You won’t get stopped or liquidated. You are fine. Keep sipping your cocktails.
Thursday, BTC flies down to 7k. Still not your problem.
Friday, BTC settles at 8k at 4pm Singapore time.
Your profit is: 9k (strike price) - 8k (settlement price) - $100 (cost of premium) = $900
$900 profit from using $100. 9X return.
In the alternate scenario, BTC settles at 20k. Your maximum loss is still 100$.
Works in different market scenarios - One of the key advantages of options trading is the flexibility of changing strats as per different market conditions. There are various strategies for all kind of markets, whether bullish, bearish or sideways
You can hedge your trades to protect them from incurring losses.
Remember, shorting is a dangerous game, why not try options and limit your risks peacefully?