What's Options trading?

An Options contract is a type of derivative that gives the contract buyer the right, but not the obligation, to buy or sell a specified quantity of an underlying asset at a specified strike price on a specified date in the future, for which the buyer must pay a cost (premium) to acquire this right.

• The contract buyer can choose to exercise the options if they can benefit from doing so, and the contract seller will have to pay the relevant amount to the contract buyer.

• If there's no benefit from exercising, the buyer can choose not to exercise it, and then the seller doesn't need to pay anything.

What are the essential elements of Options trading?

• Underlying asset: asset for trading on which derivatives contract’s price is based. For example, the underlying asset of Bitcoin options is BTC/USD index. We offer options trading on the underlying of Bitcoin, Ethereum.

• Expiration date: the date on which options expire.

• Strike price (or exercise price): the price at which the Options buyer can buy or sell an underlying asset when exercising a Call or Put options respectively.

• Contract type: Call options give the buyer the right to buy at a specified price while Put options give the right to sell at a specified price.

• Exercise Style: American Options can be exercised at any time prior to its expiration date. European options can only be exercised on its expiration date. OKX Options are European options.

• Option premium: the price at which an option is bought or sold.

Options trading can be classified into in-the-money (ITM), at-the-money (ATM) and out-of-the-money (OTM), depending on the difference between the strike price and the price of the underlying asset.

What's the settlement currency?

OKX Options Orderbooks are settled in BTC or ETH instead of stablecoins. You can use stablecoins as margin if you trade in Portfolio margin or multi-currency cross mode.

What's the index for contract?

The underlying index is BTC-USD or ETH-USD.

• Index methodology

• Index components/history

• Option exercise history

What's the contract multiplier?

The contract multiplier of BTC options is 0.01 and that of ETH options is 0.1. That means 1 contract of BTC options worth 0.01 BTC while 1 contract of ETH options worth 0.1 ETH. Please note contract multiplier of the perpetual swaps/futures are all 1, and it is contract value that is used to adjust the value of 1 contract of perpetual swaps/futures.

What are the specifications of Options trading contract?

What's the difference between OKX's Options trading and Futures trading?

What's the minimum capital requirement for Options trading?

We impose minimum capital requirement as below.

Minimum size requirement per RFQ is 10,000 USD.

How do I find out about Option trading fees?

Fee schedule is listed in Assets > Fee schedule page. Both transaction fees and exercise fees are applied. Your own trading fee can be viewable via Assets > My trading fees in your master account.

How do I set my account mode?

For market makers or any sophisticated option trader, please enable Portfolio margin. Our Portfolio margin supported most major currencies as margin.

If you are pure option buyers or option is just a small part of your overall portfolio to hedge or enhance yield on delta-one or spot positions, you do not have to switch to portfolio margin at all.

The user guide of Portfolio margin is available here. Please contact your account manager or [email protected] if you require a thorough examination on margin calculation.

Please note Portfolio margin's margin calculation is based on a risk unit, or underlying concept. BTC-USDT and BTC-USD are two separate underlying. That means, if you use BTC-USDT perpetual to hedge options, it'll not bring any margin offset benefit.

Portfolio margin liquidation starts with delta hedging, which means using perpetual or future to hedge delta risk instead of liquidating options directly to avoid slippage on options. Please be mindful of the account risk as liquidation could be very costly too.

Which position should I choose?

In any single-currency/multi-currency/Portfolio margin account, you can choose to place orders as an isolated or cross position. Isolated means this position is separated from other positions.

In Single/Multi-currency, long option positions could only be placed as isolated positions as it's free of liquidation. For pure option buyers, you could always choose isolated even if you're in Portfolio margin so that you don't need to worry about any margin requirement for long option positions.

If you intend to use cross margin like margin offsetting in Portfolio margin or stablecoins as margin, please choose cross. Otherwise, you might have to keep adding margins to an isolated position, especially shorting put positions when the market goes down.

How do I set the autoborrow?

Turn on the autoborrow in the trade settings if you intend to use USDT or USDC as margin. There are two borrowing concepts.

• Actual borrowing or liabilities: liabilities are a negative part of equity. You only have to pay interest for liabilities.

• Potential borrowing: if you only have USDT as margin but you want to choose BTC options. Initial Margin Requirement (IMR) on this option positions are potential borrowing. If you make money on options, BTC equity is positive then there's no actual borrowing, you don't have to pay interest. For option traders, as the options are traded in BTC or ETH, you'll only have borrowings on BTC or ETH. The historical and current interest rates are available here, which is relatively stable.

For more details on Options trading, visit here.