derivatives trading

As the world of cryptocurrency trading keeps growing, it’s natural to see different types of crypto exchanges popping up here and there. Top crypto exchanges nowadays can even have more than $1 billion USD daily trading volume. There are multiple reasons for this enormous growth, such as institutional money that keeps getting poured into these exchanges. It is said that Chinese miners are also responsible for the increasing trading volume.

And you know what, many years ago, the only available crypto exchanges were the ones that offered spot trading. Nowadays, crypto derivatives exchanges are becoming much more mainstream due to ever-increasing potential of crypto trading.

Different with spot trading where you can only make money when cryptocurrency prices go up, you can actually make money both ways with derivative exchanges. This is possible because derivative is actually not trading the cryptocurrencies themselves, but instead, it is a simple financial contract between two or more parties that derives the value from the underlying crypto asset. It’s an agreement to buy or sell a particular asset at a certain price and a specified time in the future.

Not only that, you can also trade with leverage on derivative exchanges, something that you cannot do with spot trading. With leveraged or margin trading, you can minimize your capital and still make big gains. 

Qries

And then, we have crypto options exchanges, which are more specific than the standard derivative trading. For your information, options are still a type of derivative, and the trading conditions are based on an underlying asset. With options, buyers will have the chance to go long or short the underlying asset at a given value, also known as the “strike price” within a time period.

With crypto options, the traders have to pay a premium rate for the opportunity to long or short the crypto asset at a certain price in the future. The idea here is to give a chance to crypto traders to be able to make a profit if they believe that certain crypto price will go down in the near future. If you want to try crypto options, MobyTrader is one of the best solutions.

Anyway, in the world of options, the basics are divided to “call” and “put”. Call option holders have the chance to buy an asset at a certain price within a specific time period. Put option holders, on the other hand, have the chance to sell an asset at a certain price within a specific time period.

And of course, because it’s option trading, crypto options holders also have to follow the same rule regarding contract expiration date. So, if you believe Bitcoin’s price would go up before the expiration of the option contract, you can choose to buy a call option with a strike price lower than the predicted valuation of Bitcoin.

Crypto options trading are considered attractive and innovative to many retail crypto traders, hence why crypto options niche is starting to grow rapidly. For example, one of the best crypto option exchanges, MobyTrader, it offers Sub-Second trading, where the expiration times are super quick up to very short 5 second timeframe. All the innovations that come from MobyTrader benefit the options exchange industry.

Can existing crypto options exchanges keep growing with all the expected new competition? It looks like they will have to keep looking for new ways to attract new traders. The most reasonable solution will be to partner with well-known players.

Let’s learn together where to find the best exchanges to start trading.

1. MobyTrader

MobyTrader offers unique features that you cannot find elsewhere. One of the interesting features from MobyTrader is its Sub-Second trading feature, where it offers super quick trading expiration times, ranging from 1 hour to a very short 5 seconds timeframe.


With MobyTrader, you are also allowed to trade with five different order types, which are single-cell orders, multiple-cell orders, inversed orders, vertical orders, and call-put orders. And the “Socialize” feature sounds interesting as well. MobyTrader claimed you can follow your Facebook friends’ live trades as long as your friends connect their Facebook accounts to their MobyTrader accounts.

2. Quedex

Another alternative for crypto option traders is Quedex. Based and regulated in Gibraltar, Quedex for EU market offers a higher variation of Bitcoin options with a wide range of strike prices. Quedex has very competitive trading fees, with just 0.03% taker trade and 0.02% market makers reward offering.

The main reason why we cannot put Quedex higher in the list is simply because of the lack of trading volume in many of their options offering. While it looks like they are still growing but some other options exchanges provide better user experience at the present time.

3. Deribit

Deribit is one of the biggest names when it comes to crypto options exchanges. Deribit focused on offering Bitcoin and Ethereum options. And for your information, Deribit also offers wide range of BTC and ETH futures outside options. With Deribit, it utilizes a maker-taker model for the exchange fees, with slightly reduced fees for the market makers.

Specifically about options, Deribit charges only 0.04% of the underlying asset value in each of its contract. On top of that, Deribit charges 0.02% delivery fee, which will be charged when the option gets settled. We see it as one of the best option exchanges because of its offerings as well as its easy-to-use User Interface. You can easily buy/sell options contracts on Deribit within just three clicks.

4. FTX

Launched in May 2019, FTX is a crypto derivatives exchange based in Antigua and Barbuda. The exchange is operated by Alameda Research, which happens to be one of the largest market makers. As a result, FTX exchange has deep order books averaging a daily volume of $50 million. Unfortunately, residents of Cuba, the United States, and Crimea are blocked from accessing this platform.

The exchange offers futures and leveraged tokens charging makers 0.02% and takers 0.07%. As for KYC/AML, users are required to verify their identity to withdraw over $1,000. The platform offers perpetual swaps for 15 assets, which is higher than those provided by main competitors BitMEX and Deribit, who both offer 2. The exchange also offers tradable indices eg, altcoin index and leveraged tokens for over 45 crypto assets.

5. Bakkt

Bakkt is still relatively new, but it had already generated a lot of hype when it was first announced due to the fact that Bakkt is majority-owned by ICE, the same company behind New York Stock Exchange (NYSE). Bakkt is also supported by other big corporations such as Starbucks, Microsoft, and BCG. 

Bakkt’s unique selling point is its clear-house plan for single-day, physically delivered BTC contracts alongside physical warehousing. Many people predicted that Bakkt would help institution adoption to the world of cryptocurrencies, but only time will tell.

Conclusion

There are not many crypto options exchanges, but their popularity keeps growing in recent years. MobyTrader remains the number one in our list while Deribit follows closely at the second place. Newcomers in the crypto option world are advised to go to MobyTrader before they try other option exchanges. When you go directly to the other option exchanges, they are often too complex for beginners.

There are also rumors that many exchanges are using whitelabel solution from MobyTrader in order to get a secondary revenue stream.

Of course, at the end of the day, you should do your own research before you decide where to trade your money regularly. We believe the world of crypto options exchanges will become even more popular in the future as it offers the opportunity for crypto traders to get rich from both upward and downward movements.

Image(s): Shutterstock.com


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