- 1 What are crypto options?
- 2 Why are crypto options gaining huge popularity now?
- 3 Which cryptocurrencies has IQ Option introduced options for?
- 4 What does a sample trade on crypto options look like?
- 5 Pros and Cons of Crypto Options Trading📈📉
- 6 What else do you need to know about crypto options at IQ Option?
- 7 Frequently Asked Questions💡
- 8 GENERAL RISK WARNING
Crypto options are gaining huge popularity in the financial markets. Even big players like Goldman Sachs are seeing demand for trading cryptocurrency derivatives. IQ Option is not left behind and has crypto options on offer. In today's article, we will tell you what cryptocurrency options are and how to trade them on the IQ Option platform.
What are crypto options?
Options are a financial instrument used to speculate on the future price of an asset. If you assume, for example, that the price of Bitcoin will rise in the next five minutes, you can buy an option on the rising price with a five-minute expiration. If your prediction was accurate, you will receive a premium. The premium is not rigid and for cryptocurrencies on IQ Option, it is usually 80% or more of the amount invested.
With cryptocurrency options, you can go long or short depending on the movement of the cryptocurrency you predict (up or down). The interface itself for trading crypto options is the same as for options on other instruments like currencies or commodities.
Why are crypto options gaining huge popularity now?
Bitcoin and other cryptocurrencies are a new asset class. Initially, traders were sceptical about them. However, that has changed and continues to change. Cryptocurrencies and blockchain technology are finding more and more new use-cases. The market capitalization of cryptocurrencies continues to grow and the high price volatility makes them attractive to traders.
Which cryptocurrencies has IQ Option introduced options for?
Users of the IQ Option platform can trade using binary and digital options. There are several popular cryptocurrencies available, that is, Bitcoin, Ethereum, Ripple, Litecoin and EOS.
As a reminder, we recommend reading the article on the differences between binary and digital options.
What does a sample trade on crypto options look like?
Bitcoin is the father of all cryptocurrencies, it's where it all started. That's why I chose a binary option on BTC for this example. I expect the price to drop. I chose the expiration time of the option to be 13:15 and entered an amount of $1000.
If my prediction comes true, I will get back $1000 and receive a bonus equal to 80% of my deposit which is $800. If I am wrong, I will lose $1000. The option can be sold before expiration.
Trading crypto options is simple as you can see. You specify the rate, the expiration time and the desired market direction. Then you wait for the result. You don't need a cryptocurrency wallet for this, because you do not actually buy or sell any cryptocurrency.
My sample trade was successful, as you can see in the image below.
Pros and Cons of Crypto Options Trading📈📉
- High price volatility provides significant profit potential.
- Access to a growing market with increasing market capitalization.
- No need for a cryptocurrency wallet or owning the asset.
- Trade on multiple cryptocurrencies, including Bitcoin, Ethereum, Ripple, Litecoin, and EOS.
- High risk due to price volatility, making losses more likely.
- Requires extensive research and strategy development.
- Geographical restrictions for certain users, such as those in the EEA.
- Limited choice of expiry times for digital options.
|Cryptocurrency||Market Capitalization (2023)|
|Bitcoin (BTC)||$1.2 trillion|
|Ethereum (ETH)||$460 billion|
|Ripple (XRP)||$60 billion|
|Litecoin (LTC)||$15 billion|
What else do you need to know about crypto options at IQ Option?
Cryptocurrency options are very attractive. The price fluctuation is high, which makes it possible to earn a lot in a short period of time. Of course, this can work the other way around and it is not difficult to generate losses as well. Therefore, it is very important to prepare a strategy. At first, it is advisable to focus on one cryptocurrency and observe its behaviour.
It is also a good idea to master the trading interface on a demo account in order to quickly set up trading parameters. Digital options on cryptocurrencies often have higher premiums than those on binary options. However, with digital options, we have a very limited choice of expiry (1m, 5m and 15m).
New cryptocurrency options are only available to users from non-European (non-EEA) countries.
Do you like cryptocurrencies? Want to add a new way to make money with them? Be sure to try crypto options with IQ Option.
We wish you good luck!
Frequently Asked Questions💡
- Q: What is the main difference between binary and digital options?
- A: The main difference between binary and digital options is the payout structure. Binary options offer a fixed payout, while digital options offer a variable payout based on the price difference at the time of expiry.
- Q: Can I trade crypto options without owning any cryptocurrency?
- A: Yes, you can trade crypto options without owning any cryptocurrency or needing a wallet. You're speculating on price movements, not buying or selling the asset.
- Q: Can I trade crypto options if I'm located in Europe (EEA)?
- A: No, new cryptocurrency options are only available to users from non-European (non-EEA) countries.
- Q: How can I improve my chances of success in crypto options trading?
- A: Develop a solid strategy, focus on one cryptocurrency initially, and master the trading interface using a demo account to increase your chances of success.
- Q: Can I sell my option before the expiration time?
- A: Yes, you can sell your option before the expiration time. This can help you to lock in profits or minimize losses.
GENERAL RISK WARNING
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