Binance Exchange Launches Options Trading on Mobile App
Cryptocurrency exchange Binance this Monday announced the launch of options trading. While the new service is available only in the mobile application for iOS and Android.
An option is a financial instrument that gives its owner the right, but not the obligation, to buy or sell the underlying asset at a specified price in the future. The seller’s risks in this case are covered by the remuneration that the buyer transfers to him.
Binance offers its clients so-called American options, which, unlike European options, can be redeemed at any time before the expiration of the contract..
The user’s futures wallet is used to trade options. The company notes that on rare occasions this may result in the liquidation of margin positions in futures, and asks to take care of sufficient collateral in advance..
Only Bitcoin contracts paired with USDT stablecoin are currently available for options trading. After initial testing period, Binance promises to expand the list of available assets.
“Options contracts are a long-awaited product that allows traders and miners to buy insurance for their positions, and speculators to benefit from market movements. More features and products are waiting for you in the future, ”said Binance CEO Changpeng Zhao.
Initial user reactions to Binance’s new offering have been tepid. Some point to a high overpayment rate relative to other derivatives exchanges. In addition, options on Binance are traded for 10 minutes to 24 hours, making them difficult to use as a hedging instrument..
More importantly, in options trading on Binance, the user can only act as a buyer of contracts, while the exchange itself is the only issuer. Usually trading platforms that allow clients to act on the side of sellers include this feature among the main advantages..