What the future might hold in terms of the evolution of crypto options trading and how innovations can improve market efficiency?

Options trading has revolutionized the crypto derivatives market and improved risk management liquidity. The newly introduced IBIT options have been a great addition to this transformational process and have attracted much institutional interest, while bringing crypto closer to the traditional financial market. 

In this article, we’ll examine the current state of the crypto options landscape, what the future might hold in terms of the evolution of new strategies,and how these innovations can improve market efficiency. We’ll also examine how 

 (CEXs) could converge the crypto and traditional finance (TradFi) markets.

Crypto options trading emerged as a frontier of the cryptocurrency derivatives market. Its roots date back to 2016, when the first BTC options market launched. It can be categorized into three different stages as follows.

These three stages represent some of the key developments of crypto options trading as it’s transformed from a niche product to a sophisticated financial instrument, attracting retail and institutional traders. Despite the rapid adoption of crypto options trading by key players, its trade volume and level of sophistication still lag compared to trading in traditional markets. However, this could change due to new innovations.

2024: A Milestone Year for Crypto Options Trading and Potential Market Structure Transformation

2024 has been an important year for crypto options trading. In addition to unprecedented growth and increasing institutional adoption, the launch of Bitcoin ETF options, particularly BlackRock's iShares Bitcoin Trust (IBIT), which attracted nearly $2 billion in notional exposure on its first day of trading, could be a watershed moment for crypto options trading. These crypto ETF-related options could be an effective way for TradFi and institutional investors to hedge against the risks associated with crypto’s volatility. These tools could help transform the broader crypto trading landscape and market structure, particularly in liquidity and institutional participation, as follows.

The crypto options market is expected to grow even further in 2025, based on the continuation of positive market sentiment, with new innovations in the pipeline. Some key expectations for the crypto options market in 2025 include the following:

Bybit's Innovations Lead Crypto/TradFi Market Convergence

Bybit is a key player in the convergence between crypto and TradFi markets, particularly in options trading. Its exchange has introduced innovative features that bridge the gap between these financial ecosystems, catering to both institutional and retail traders.

 also simplify collateral management and reduce cross-currency settlement complexity. This aligns with the growing trend of 

-settled derivatives in crypto markets, mirroring the cash-settled options common in traditional finance.

Bybit has expanded its options offerings beyond 

, broadening the scope of tradable assets and mirroring the diverse options available within traditional markets.

Bybit's implementation of advanced risk management tools, such as

, allows traders to analyze and hedge their positions more effectively, bringing crypto options trading closer to the level of sophistication seen in TradFi options markets. Additionally, its user-friendly interface makes options trading more accessible to retail traders, potentially expanding the market's participant base. 

These innovations contribute to the overall maturation of the crypto options market, facilitating the convergence of traditional finance and digital asset trading while addressing the unique challenges of cryptocurrency volatility and liquidity.

The rapid evolution of crypto options trading, particularly with the introduction of Bitcoin ETF options, marks a significant milestone in the cryptocurrency market's maturation. This development has substantially enhanced market efficiency, liquidity and risk management capabilities, attracting considerable institutional participation. The unprecedented trading volumes and sophisticated strategies employed in crypto options trading, such as 

 writing and synthetic long positions, signal a convergence with traditional financial markets.

Looking ahead, the crypto options market is expected to continue growing and innovating. While expectations are for BTC to reach a new all-time high in this cycle, the options market will likely see increased volume and more diverse product offerings. However, this potential growth remains subject to regulatory developments and macroeconomic factors that play a crucial role in shaping the future of crypto options trading. While the ties between crypto and TradFi are expected to grow, CEXs such as Bybit emphasize the importance of this convergence, which aligns with its vision of bridging the gap between crypto and traditional finance.

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Beyond Volatility: How Options Trading Is Paving the Way for a New Era in Cryptocurrency

Where will SOL go after reaching a new ATH?

 reached a new all-time high in mid-November 2024 as recent developments in the Solana ecosystem and support from its community strengthened the market's confidence in SOL's outlook. Some of the most actively traded tokens in the market, such as 

, MUSTARD and FATHA, are all based in Solana’s strong community. Data from DefiLlama shows that the monthly trade volume of DEXs on Solana reached $100 billion for the first time in November 2024.

Figure 1: Monthly trade volume of DEXs on Solana. Source: DefiLlama

 this year with a 117% YTD gain, while BTC and ETH surged 113% and 45% in the same period (respectively). While the market seems to expect BTC to trade sideways until the end of the year, the market's attention could shift to major alts such as SOL. This week at 

, we’ll dive into the derivatives trading data on Bybit to analyze traders' sentiment toward SOL. 

Long Accounts Accumulate on SOLUSDT Perps 

Derivatives trading on Bybit shows that traders have increased interest in betting SOL with an upside bias. 

 page on Bybit shows that the open interest of 

 has been maintained at a high level, while the number of total long accounts has been increasing for at least four consecutive days.

The price of SOL has been relatively soft after hitting its ATH at $264. That's when the number of long accounts started to increase. This divergence could imply that derivatives traders have been gearing up for a potential trend reversal, thereby opening more long positions.

We've highlighted the importance of open interest and the long/short ratio in perpetuals trading 

. Learn more about how to interpret this data in the 

Figure 2: SOLUSDT Perpetuals daily open interest on Bybit. Source: Bybit 

Figure 3: SOLUSDT Perpetuals daily long/short ratio on Bybit. Source: Bybit

The upside bias of SOL can also be seen in the Bybit options market. Daily notional open interest in SOL options has been increasing to over $50 million, indicating that options traders have been increasingly willing to enter the SOL market with options. This could also be a sign of possible strength in the momentum of the price. Data shows that most traders have been eyeing contracts with a Nov 29, 2024 expiration, while open interest in December 27 expiration contracts is expected to increase as we move forward to year's end.

Figure 4: Open interest of SOL options on Bybit. Source: Bybit

Figure 5: Open interest by expiration of SOL options on Bybit. Source: Bybit

For options contracts with a Nov 29, 2024 expiration, most of the open interest is focused on the $240 and $260 strike prices, as indicated in Figure 5. While both strike prices are too far off from the current price level (about $230 as of Nov 26, 2024), this could imply that some options traders still believe that the price of SOL could hit its ATH again by the end of the month, while the OI on $100 puts could be part of the overall hedging strategy.

Figure 6: Open interest by strike of SOL options with Nov 29, 2024 expiration on Bybit. Source: Bybit

What's even more interesting is the open interest of SOL options contracts with a Dec 27, 2024 expiration. It shows a notable build-up of open interest at the $300 and $360 strikes. This could indicate that some options traders are bullish on SOL, and are betting the price will have a chance to jump over $300 by the end of the year.

Figure 7: Open interest by strike of SOL options with Dec 27, 2024 expiration on Bybit. Source: Bybit

The derivatives market's response to Solana's new all-time high reveals a sophisticated approach by institutional traders. While a new ATH could be exciting, the real story lies in the positioning of derivatives, where smart money maintains controlled bullish exposure through options and perpetuals. However, the crypto market is known for its constantly changing nature. It's important to keep up-to-date and reassert such data from time to time, as market sentiment may shift at any time.

: Investing in cryptocurrencies and their derivatives involves substantial risk of loss, and isn’t suitable for every investor. This article provides facts for educational purposes only, and does not represent any financial advice. Prior to making any investment decisions, please ensure you fully understand the risks involved and seek independent advice if necessary. Our customer support team is available to assist you with any inquiries.

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Learn From Smart Money: Derivatives Traders Show Optimism on SOL After a Fresh ATH

This session we discussed about the recent shifts in the macro landscape and how options trading can effectively hedge against downside risks. 

The cryptocurrency market has seen significant shifts in the current macro landscape. On the one hand, a 

 developments are driving market sentiment. On the other hand, the market seems concerned about persistent inflation and a relatively hawkish Federal Reserve. This market environment could present both challenges and opportunities, which is why options trading could effectively help you hedge against downside risks and capitalize on volatility. 

, we discuss how the U.S. election outcome has reshaped crypto market expectations for 2025, where U.S. interest rates will head in the next 12–18 months and how traders can take advantage of options trading in this challenging market.

 recaps the Nov 19, 2024 Mastermind livestream (in case you missed it), featuring experts from macroeconomic and derivatives trading backgrounds.

High Expectations of a Pro-Crypto U.S. Administration

The panel started with a discussion of how the U.S. election outcome has reshaped crypto market expectations for 2025. All the panelists expressed their optimism about the crypto market under a Trump administration, especially if the promise of establishing a national BTC strategic reserve materializes. The candidate took a pro-crypto stance during the campaign, and even launched a few crypto projects on his own, so he could be someone who understands the space.

Institutional adoption scaling could be something to look forward to. Janson Wang said, "The market has been talking about crypto's institutional adoption in the past two years, but this time, it's actually going to be a lot of institutional adoption driven by 

 and traditional funds, and investors have shown strong interest in those products."

Tommy Chen added, "Crypto-related regulations will be opening up and leaning on a more friendly side, potentially encouraging more Wall Street players to participate in crypto." 

However, there are also potential risks that all market participants should be aware of. Joe Takayama highlighted that "Trump has made a lot of promises during the campaign, and the market is expecting a lot of (positive) things will happen, and if the U.S. administration disappoints the market in some ways, there could be a downside risk."

U.S. inflation and interest rates are among macro traders' most watched factors. Since BTC is a macro asset now, these two factors also concern our panelists. Daniel Yu pointed out that the pressure of inflation remains intact, and interest rates in the U.S. are still at a relatively high level compared to historical data. That's why inflation hedging will still be a major narrative among institutional investors in 2025. He also added that BTC now appears as an alternative to gold as an 

With only one Federal Open Market Committee (FOMC) meeting left in 2024 for the U.S. Federal Reserve after the November 25 bps cut, Janson added that according to the CME FedWatch, there's only a 50% chance that the Fed will cut another 25 bps of its benchmark interest rate in the December 2024 meeting, and an equal probability that it will maintain interest rates at current levels. He also emphasized that interest rate traders have been betting the Fed will only reduce interest rates an additional 25 to 50 bps in the coming three to four months — a lot less than previously expected — which could contribute to a strong dollar and affect BTC’s price.

Despite many watchers directing their attention to the U.S. greenback, Joe Takayama expressed that it may not really affect the current crypto market at all — simply because crypto is a sentiment-driven asset, and market sentiment comes from the U.S. economy and how strong it is. He also added that many investors he knows are taking a lot less risk than they would like, which means they’re under-exposed and would need greater risk appetite to buy risk-on assets, such as BTC.

Why Trade Options? — And How to Capitalize on Volatility

The panel also discussed the advantages of options trading over other derivatives. Institutional traders generally prefer trading options in crypto, simply because of its volatile nature. For example, if a trader enters the market with perpetuals or futures, they could face liquidation or margin call risk, even when the price increases, but it doesn’t happen in options trading. Some of the panelists also shared that, as opposed to using options outright, they make a good complement to an overall investment portfolio and enhance their return profiles.

The panelists also discussed some of the possible options trading strategies for the current market, such as cash-covered put selling. On the one hand, traders can benefit from getting the underlying asset at a lower price if physical delivery is accepted. Otherwise, traders can earn a decent yield from the options premium. Kendrick also shared his insights, adding that traders might also consider a covered call 

 put selling combination, so that they can acquire the underlying asset at a lower entry price and, at the same time, use the option premiums from short options to cover the cost of the call options. This way, it's more like a tool for cash flow.

Other panelists also contributed valuable insights on their BTC options strategies. For example, if a trader is bullish on BTC over the medium-to-long term, they may consider a three-to-six-months call spread so that they can buy one out-of-the-money (OTM) call and sell another call with a higher strike price. However, if the price of BTC doesn't move much, the cost of time decay could be a concern.

Kendrick also highlighted some of the unique features of Bybit options, such as USDC-settled options contracts — which means traders can use USDC to buy or sell options contracts. In addition, Bybit has been working with leading liquidity providers to provide the best-in-class liquidity to both institutional and retail traders. 

Options trading may look complicated at first glance, but as we navigate through uncertain market conditions, crypto options trading emerges not just as another trading instrument, but as a sophisticated tool for risk management and opportunity capture. Whether it’s strategic hedging, volatility plays or structured strategies, options provide traders with the ability to profit from market movements in any direction — a crucial advantage in today's environment. Follow the 

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Bybit Mastermind Live ICYMI: Crypto Options Trading in Uncertain Times

Traders seem to expect BTC’s momentum could slow down a bit after the price hit over $97,000.

Positive sentiment has continued to fuel the cryptocurrency market as the expectation of further institutional adoption of 

 keeps growing. Options trading of BlackRock’s Spot Bitcoin ETF IBIT 

 with a bang, attracting almost $2 billion on the first day of trading. The hope of more spot ETF derivatives to change the market structure with additional institutional money onboarding crypto is high.

, we explored the possibility of the market being overleveraged, which could be painful if the current leverage unwinds. Data from CryptoQuant shows that the estimated leverage of the current BTC markets has reached another YTD high.

Derivatives data on Bybit shows that traders seem to expect that BTC’s momentum could slow down a bit after the price hit over $97,000, and are focusing more on downside protection.

Figure 1: Bitcoin estimated leverage ratio at 0.23. Source: CryptoQuant

BTC Options Open Interest Returns to Previous High While Perps Are Catching Up

Derivatives traders have been actively participating in BTC markets as 

 on Bybit has surged to over $3 billion, on par with the previous high on Nov 14, 2024. Although the options OI has increased, it still hasn’t surged above the previous high. At the time, BTC’s price had already jumped to over $97,000. If the OI doesn’t follow suit and break above the previous high in the coming days, this could be a sign that the market could become a bit exhausted — something for all market participants to be aware of.

Figure 2: Daily open interest for BTC options on Bybit. Source: Bybit

 have also seen increased open interest in recent days. Perpetuals have been among the most favorable products for day traders and short-term speculators. Rising open interest could indicate that more traders are looking for short-term profit, which could bring additional volatility to the market. 

Figure 3: Daily open interest for BTCUSDT Perpetuals on Bybit. Source: Bybit

Dec 27, 2024 remains the most popular expiration date for BTC Options on Bybit, with most of the open interest there. Within that expiration, $120,000 calls had the most OI, and $100,000 calls accumulated the second-largest OI. 

Figure 4: Open interest by strike for BTC Options with a Dec 27, 2024 expiration. Source: Bybit

Meanwhile, the market’s optimism that BTC will hit $100,000 by the end of the year seems to support the current price momentum. Shorter-dated options could show that traders are also looking for downside protection. The Bybit 

 page shows that BTC Options with a Nov 29, 2024 expiration have a strong 24-hour inflow to $90,000 puts. This could indicate that some traders are also anticipating some degree of price correction by the end of the month. 

Figure 5: 24-hour volume by strike for BTC Options with a Nov 29, 2024 expiration on Bybit. Source: Bybit

 for BTC Options on Bybit also indicates a possible downside protection in play among options traders. A smirk skew, or left skew, is a skew curve that’s steeper on one side (the left side) than the other. Traditionally, a smirk skew curve could mean that traders have been protecting their portfolios against a possible declining market. At the time of this writing (Nov 21, 2024), BTC Options contracts on Bybit with Nov 29, 2024 and Dec 27, 2024 expirations have both shown a smirk skew. However, this doesn’t necessarily mean traders are bearish on the price, and could just be part of the trading strategy. For example, traders could set up collars by buying out-of-the-money (OTM) puts and selling OTM calls simultaneously, so that they can profit in case BTC’s price drops, gain upside exposure and potentially offset the cost of buying the puts. 

Figure 6: Implied volatility of BTC Options with Nov 29, 2024 and Dec 27, 2024 expirations. Source: Bybit

The current BTC leverage trading may be complex, but tells a revealing narrative about market sentiment. The divergence between high leverage and increased hedging activities also reminds us that market dynamics are rarely straightforward, and adopting a 

 seems increasingly important in this diverse market.

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Learn From Smart Money: BTC’s Leverage Remains High as Traders Hedge Against Downside Risks

While some believe that the BTC bull run may last at least until year-end, some ETH derivatives traders may have a different idea.

The positive sentiment around BTC has resonated throughout the border cryptocurrency market as the price of the leading crypto reached another ATH. ETH also benefited from the bullish sentiment as it handily surpassed $3,000, the highest level since August 2024.

, we noted that some options traders on Bybit have been using $2,700 and $3,600 calls with a year-end expiration for this run. Now, the $2,700 calls have already turned significant profit at the current price level.

While some believe that the BTC bull run may last at least until year-end, some ETH derivatives traders may have a different idea. In this edition of Learn From Smart Money, we’ll follow up on the latest ETH derivatives trading data on Bybit and try to unlock the reasoning behind these traders’ strategies.

Renewed Interest in ETH — But Not Overhyped

As of Monday, Nov 11, 2024, the latest bull run has pumped ETH's YTD gains to about 35% (from the 12% previously mentioned). And yet, it's still behind most of the other major cryptos, such as BTC (83%), SOL (86%) and TON (123%). However, it's clear that the public's interest in ETH has rebounded. Google Trends indicates that the term "ETH" has gained interest in its search engine. 

It's considered a good sign that the general interest in a specific crypto asset has increased. What's more encouraging, however, is that interest in ETH remains relatively low compared to previous cycles — which means that the market is still far from being at an irrational level or 

Figure 1: Google search interest in ETH for the past five years. Source: Google Trends

ETH's ETF capital flows may also support the same stance. Data from CoinGlass for the period from Nov 6–8, 2024 shows ETH Spot ETF net inflows of $217.9K, the biggest total since August. Since Spot ETF issuers directly hold the crypto, the capital flow of ETH Spot crypto ETFs is highly correlated with the price, and last week's net inflow aligns with the price actions, just as in August.

Figure 2: Total capital of ETH Spot ETF flows. Source: CoinGlass

Increasing Open Interest From ETH Options and Perpetuals

The strong interest in ETH has also been observed on Bybit, especially in derivatives trading. Bybit's 

 has reached a new monthly high as of Nov 11, 2024, while open interest

 has been hovering near its monthly high.

Open interest is important as data because it tracks the number of active market participants and — to some extent — can reflect the level of willingness of derivatives traders. Besides, a higher level of open interest can also indicate higher liquidity in the market, as liquidity is one of the most important parts of trading. It helps traders enter and exit a trade at the desired price with minimal 

Learn more about the difference between open interest and trade volume 

Figure 3: Open interest and volume of ETH Options on Bybit. Source: Bybit

Figure 4: Open interest and volume of ETHUSDT Perpetuals on Bybit. Source: Bybit

Although macro data suggests that overall interest in ETH has been increasing, the number of holders with short positions on ETH Perpetuals has also slowly been growing. 

Figure 5 (below) shows the daily long/short ratio of ETHUSDT Perpetuals on Bybit. The number of holders with net short position has been increasing since Nov 7, 2024, and has stabilized at around 23% (of the net long account number). 

While not alarming, a continuation of the increase in the net short account number could mean a turnaround of the bullish momentum. Thus, ETH Perp traders should closely monitor the development of this data.

Figure 5: Long/short ratio of ETHUSDT Perpetuals on Bybit. Source: Bybit

Some Options Traders Are More Bullish, Some Maybe Less

Options have been gaining popularity among ETH derivatives traders largely because of their composability and flexibility when it comes to strategy execution. Contracts with a year-end expiration remain ETH speculators' favorite tenor, as contracts with a Dec 27, 2024 expiration have the highest open interest on Bybit.

Figure 6: Open interest of ETH options with a Dec 27, 2024 expiration. Source: Bybit

At the time of this writing (Nov 11, 2024), $3,100 and $3,200 calls — which are already 

 (ITM) — are still sitting with most of the open interest. (“ITM call options" means that the underlying asset's market price is higher than the call option's strike price.) On the other hand, $4,200 calls — which are still out-of-the-money (OTM) — have also received noticeable OI. 

If a trader is bullish on the price of a specific asset within a certain time period, they’ll likely use OTM calls with a specific expiration to speculate on that asset. In ETH's case, ETH bulls are expected to take profit from the $3,100 and $3,200 calls and rotate to calls with higher strike prices to maximize the opportunity. We’ve already seen some of these rotations toward $4,200 calls.

However, if there's no significant open interest increase in ETH calls with higher strike prices in the coming days, it could be a sign that options traders believe that the momentum of the ETH rally may need a break.

Figure 7: Open interest of ETH call options with a Dec 27, 2024 expiration by strike. Source: Bybit

Let’s move on to the puts with year-end expiration. The $2,000 strike price remains the most popular choice among ETH options traders. With the current market momentum, the chance of ETH dropping to $2,000 by the end of the year is unlikely. However, having those puts could be part of a downside protection strategy, such as a 

Learn more about options strategies in the 

Figure 8: Open interest of ETH put options with a Dec 27, 2024 expiration by strike. Source: Bybit

While the crypto market is currently in a state of euphoria, certain macro events should be on the watchlist, including the upcoming U.S. economic data and U.S. Fed Chair Powell's speech after the FOMC meeting. With these developments, the crypto market is expected to get more clarity on the pacing of future rate cuts. 

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Learn From Smart Money: Derivatives Data shows Divided Views on ETH as ETF Recorded Strong Inflows

Crypto options give traders the right to buy or sell an underlying crypto asset at a specified price and date. Discover how to get started trading crypto options on Bybit.

Crypto options are derivatives contracts that give traders the right to buy or sell an underlying crypto asset at a specified price on a predetermined date. They offer flexibility without requiring holders to own the underlying asset.Bybit offers various expirations and USDC-settled contracts, making crypto options trading accessible and straightforward.

 are contracts that give you the right, but not the obligation, to buy or sell a cryptocurrency, such as Bitcoin (BTC) or Ether (ETH), at a specific price in the future.

People use crypto options for two main reasons: to make money if the price goes the way they predict, or to protect their positions if the price goes against them. 

Since traders aren’t buying the actual crypto itself, crypto options are seen as a flexible way to take advantage of market ups and downs. That’s why many traders use them to manage risks or gain exposure using 

To understand how crypto options work, let’s go over some basics.

Strike Price and Key Terms: ITM, ATM and OTM

 is the price at which you can choose to 

There are three terms used to describe a strike price’s relationship to an asset’s current market price:

Options come in two basic types: calls and puts.

In addition to buying call and put options, traders can also sell them. Briefly, here’s how it works.

Crypto traders use options to leverage their market positions while managing risk in the volatile cryptocurrency market. Options provide traders with the ability to speculate on price movements without the need to own the underlying asset directly. They also serve as an essential tool for hedging, as traders can protect their portfolios against adverse price movements. For instance, if a trader holds a significant amount of Bitcoin (BTC), they might buy put options to guard against a potential price drop. 

Additionally, options allow traders to use less capital as compared to buying cryptocurrencies outright, providing leverage that can amplify gains. Moreover, options strategies such as writing covered calls (see below) can generate income on one’s crypto portfolio.

Which Crypto Options Can You Trade on Bybit?

. With options, you can get exposure to these assets without buying them directly.

Bybit's options are USDC-settled. This means any profit or loss is calculated in USDC (a stablecoin pegged to the U.S. dollar), making transactions simpler and obviating the need for actual crypto transfers.

Any gains or losses directly affect your account balance without the hassle of holding the underlying asset. You can focus on your trading strategy while enjoying a straightforward settlement process.

Bybit offers a variety of expirations to suit different trading styles, from short-term plays to long-term positions. You can choose from daily, bi-daily, tri-daily, weekly, bi-weekly, tri-weekly, monthly, bi-monthly and quarterly expirations. This allows each trader to adapt to market conditions, as well as their personal trading strategy, whether they’re after quick gains or looking to hold out for larger trends over time.

Getting started with crypto options trading on Bybit is simple and intuitive, whether you’re a beginning trader exploring options for the first time or an experienced trader looking to refine your strategies. 

 is ready, the next step is to fund it with crypto or fiat currency. Head to the 

Note that as Bybit’s options contracts are settled in USDC, you have to transfer USDC as margin to trade options.

Step 2: Access the Options Trading Platform

In this guide, we’ll show you how to trade Bitcoin options.

On your desktop, navigate to Bybit’s options trading platform by selecting 

The options chain is a central feature where you’ll find available contracts, categorized by expiration dates and strike prices. You can choose from a wide range of expiration dates, including daily, bi-daily, tri-daily, weekly, bi-weekly, tri-weekly, monthly, bi-monthly and quarterly expirations. 

Bybit offers two types of options: calls and puts. Select a 

 if you expect Bitcoin’s price to rise, or a 

Calls are displayed on the left side of the options chain, while puts are on the right side, with strike prices listed down the middle.

Step 5: Choose Your Strike Price and Expiration Date

Pick the strike price and expiration date that best match your trading strategy. For example, if you believe BTC’s price will increase over the next week, you might select a weekly call option at a strike price near its current market value.

Once you’ve selected a contract, choose your desired strike price. This will open an order placement window in which you can enter key trade details like the following:

If you’re trading Bitcoin options, you’ll see additional details, such as implied volatility and 

 (delta, gamma, etc.), which can help you evaluate potential risks and rewards.

After you’ve reviewed your order details, click on 

A confirmation window will appear, showing a summary of your trade. Click on 

 and your options order will be submitted.

When it comes to crypto options trading, it’s essential to have a strategy. Here, we’ll briefly go over a few beginner-friendly strategies that are popular among traders.

How to Use Bybit's Option Strategies Feature

 feature makes it easy to execute various options strategies in just a few steps.

Step 1: Access the Options Strategies Feature

 at the bottom of the screen, then select 

Each strategy card has an introduction, a profit and loss (P&L) graph and key metrics, such as maximum profit and margin requirements.

Bybit provides two modes to set up your options strategy: 

Default Mode (Recommended for Beginning Traders)

In Default Mode, Bybit automatically selects the coin, strike price and expiration date, based on current market conditions.

: In Default Mode, parameters such as strike price and expiration date are automatically set, and cannot be changed.

Pro Mode offers greater flexibility, allowing you to customize your strategy parameters.

Once your strategy is configured, click on 

After creating a strategy, you can track it under 

Confirm the strategy information, then click on 

 to close it. The strategy will close as a market order.

In cases of extreme market conditions, lack of liquidity may impact the ability to close the strategy, so be mindful of market conditions when exiting.

Intermediate

crypto options trading.png

How to Get Started With Bybit Options Trading

Data shows that derivatives traders on Bybit have been setting up for short-term market volatility, while things could be relatively stable toward year-end.

 hit a fresh all-time high as traders and investors braced for the outcome of the U.S. elections and the upcoming interest rate decision from the Fed. As our 

 highlighted, the rising odds for a Republican presidency have increased volatility in Treasuries and equities, suggesting significant market implications depending upon election outcomes. Data shows that derivatives traders on Bybit have been setting up for short-term market volatility, while things could be relatively stable toward year-end.

 derivatives traders have been focusing on the upcoming macro events, and the U.S. elections are front and center, dominating news headlines globally. Despite the price of BTC remaining in its multi-month range, data shows that traders have been keen to bet on BTC's potential price movement after the U.S. elections. 

 page indicates that most of the open interest in BTC options was has been on contracts with a Nov 8, 2024 expiration.

Figure 1: Open interest by expiration of BTC options on Bybit. Source: Bybit

Figure 2: Open interest by strike of BTC call options with Nov 8, 2024 expiration on Bybit. Source: Bybit

Among the calls, the $75,000 strike price seems the most popular choice, while $73,000 and $71,000 have also seen notable open interest. This could mean that some traders are betting on the price of BTC soaring above $70,000 or potentially hitting $73,000 right after the U.S. elections.

The picture seems clearer when looking at the puts. With the same expirations, most of the open interest has focused on puts with a $68,000 strike, and puts with a $62,000 strike have also received plenty of attention.

So, how can we interpret this overall? At the time of this writing (Nov 5, 2024), BTC has been trading around $68,700 on Bybit. Calls at a $73,000 strike with a Nov 8, 2024 expiration may be considered aggressive, while $68,000 puts with the same expiration could be considered reasonable downside protection for the election trade. 

Figure 3: Open interest by strike of BTC put options on Bybit. Source: Bybit

It's worth noting that the implied volatility (vols) of short-dated BTC options has been rising rapidly to over 89% (even realized vols went over 40%), which many consider relatively high. Vols is one of the key components when it comes to pricing options contracts. In a nutshell, the higher the vols, the higher the price of the options contracts, and vice versa. Since the vols of short-dated BTC options have surged to a relatively high level, traders may need to pay a premium if they want to use these options contracts to speculate on BTC prices, which may limit the upside.

Figure 4: Implied volatility of BTC options with Nov 8, 2024 and Nov 29, 2024 expirations on Bybit. Source: Bybit

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Learn From Smart Money: BTC’s Leverage Remains High as Traders Hedge Against Downside Risks

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Learn From Smart Money: Derivatives Data shows Divided Views on ETH as ETF Recorded Strong Inflows

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How to Get Started With Bybit Options Trading

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Learn From Smart Money: BTC Reaches a Fresh ATH Amid Macro Events, but What’s Next?

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Learn From Smart Money: The Case for ETH Playing Catch-Up

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Learn From Smart Money: ETH’s Rally May Need a Break, but Upside Risk Remains Intact

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Learn From Smart Money: Increasing SOL Interest From Derivatives Traders

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How to Improve Your WSOT Ranking in Trading Volume Using Bybit Options

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Learn From Smart Money: Observing Market Sentiment From Derivatives Data