Topic: Crypto volatile again, Whats stopping you from trying Options Trading? - page 3. (Read 894 times)

Shorting got you REKT? Try Put options.
Feeling bearish and want to profit from a potential fall in asset prices, but getting rekt by a rough market? You may be better off buying Put options than short selling.

Don’t get REKT by crypto volatility

Read more on Sparrow's Medium Channel.

Although we are still pretty new into the market,  you should check Sparrow Exchange. We traded over 2million USD during one of our contests.

Pretty well said, but problem here in crypto market is volume in the options. I barely know only bitmex allowing you with options for Bitcoin and a few cryptocurrencies and these are traded with pretty less volume. Which means even if you think that you have made a wrong choice and you want to exit the whole scenario with a loss you just can't. I hope you know that most people make their fortune using option selling and not buying because decay of time is in your favour. But in crypto these types of option selling is impossible because situations may come when you might even be unable to sell your option at Stop loss. Shorting is a much more safer game when it comes to option.

Option trading works better using a higher time frame at least using a daily time frame as a reference point just as the OP analyzed while capitalizing on the market volatile of crypos in recent times especially ethereum that fell deeply in the last couple of days however to have an edge over the market an option trader must have deep and sound understanding of Technical analysis else trading without that knowledge and skill amount to trading option like a gambler.
More so a sound money management is the key to being profitable in the long run based on brokers with a higher percentage pay out or returns just like sparrow.

You could use Options trading like insurance, while capitalizing on the volatility and earning some premium while being on it.

@OP, I know trading is more effective during volatility, but it doesn't mean your calculations and methods will work your favour always. Don't forget that when you buying then someone is selling on the other end. That's trading and everyone could not get profits always. We don't know that bitcoin would dump exactly from my buy point, does anyone know it. And that's how traders losing. However, if someone could play with patience then there is very low chances for loss. And during volatility trader have to trade with extremely caution.

8x profit in a bear market?!

Just last week, a Sparrow user shared his profitable trade with our Telegram community. How did he manage to do it?



Here's the article from Sparrow Exchange's medium page on how he managed to pull it off.

It can be a little intimidating in the beginning but thats what we are looking to change. A very simple UI to help new traders understand what they are getting into. Trading options doesnt always have to be about making big bucks with technical analysis. You could make sell calls and try to earn weekly premiums, which could get you up and over 200-300% profits annually. All without really breaking a sweat.

In time I've learned that options is a whole different game and I don't recommend anyone using them until they don't have a good grasp of basic technical analysis. Futures and options are derivative products that hold their own intricacies and they can confuse the hell out of a newbie trader especially on an emotional level. I view trading as a leveling system if you really want to use derivatives. So once you've mastered technical analysis and risk management I'd move on to using futures and then options to maximise my potential 

Option trading is indeed better than futures trading when it comes to limiting the risk. But I am not a big fan of option trading because of the incredibly high volatility of cryptocurrency. I usually trade options in case I want to hedge my risk and I will still prefer it for the same. One wrong trade in option with leverage can ruin the whole portfolio. Unless you're good at day trading, one should never trade options or for the matter futures.

We've had a few contests on our social media and a couple of contests as well. Currently there arent any running but join our social media for updates.

Thanks, I'll look into it. Is there any promotion going on, on Sparrow?

Here's the basic Options training by Investopedia. They also use examples to make you understand in a simple yet effective way. Sparrow Exchange is working on creating their own content for new traders interested in trading options. Will update it here whenever they do release it.

For books, You could try Understanding options by Michael Sincere as well as When Genius Failed - Roger Lowenstein.

Hi James! Would like to clear some misconceptions here.

Options trading is risky

Flash crashes are very common in this volatile crypto market. This means that overly leveraged traders and investors will have to constantly face the problem of margin call, premature liquidation and large unforeseen losses. In September 2019, a Bitcoin flash crash of over $1,500 caused $651m liquidation on Bitmex.

Great risk/reward with options

By buying a Put option instead of shorting, you do not have to worry about being forced out of position prematurely. Risk is limited to just the Premium Payable while you still enjoy leveraged returns on your position.

Options trading is rigid

Actually options are considered one of the most versatile trading tool in the market, enabling you to profit in any market condition, whether you think the market is going up, down or sideways.

On Sparrow, we also provide customizable options - you can pick your expiry date (options settlement is every Friday at 4pm (GMT+8)  - whether short term (1 week ) or longer term (few weeks).

I'm a conservative trader, this means that before i enter into a trade i must have an entry and exit strategy, I have also used stop losses on almost all of my trades. Options trading is risky for me because of the nature of the trade, as i like to choose long term trades based on future events occurrence which forms part of my trading signals. For a Day trader, I think options trading is an option but to me who is conservative and my trades are either short term or long terms - options trading is more rigid.

hmm i think venalli was referring to options trading in general, not specifically to Sparrow Exchange (they have a very helpful community on Telegram https://t.me/SparrowExchange! helped to explain alot of options concepts to a noob like me)

That statement is right if it is on physical settlement, Sparrow I think they only offer cash-settlement (which is like what you said, buyer of the option earns the price difference) for now. But the thing about options is that since you set strike price at 9K, it means as a seller, you are ok to sell it at 9K, so still win-win situation 

can someone suggest me some books or videos, as well as strategies for trading options? Thanks.

How come? Can you please explain? I know the options market pretty well and found your statement amusing.

In this above scenario, if no one buys your contract, do your company offers physical settlement? Obviously the trader will have to pay the remaining price!

Please explain!

Too often I see that 95-99% of traders empty their deposits for a long period of time. Here the other day there was again some kind of report from the stock exchange, there it was either daytrading futures or/and options and the same info - over the period of 3 years 98% were empty.
Actually, I don’t have any abilities to predict price movement, so I hodl mostly.

Hello! Let me try and help to clear some misconceptions

We all know that flash crashes are very common in this volatile crypto market. The volatility in the crypto market means that overly leveraged traders and investors will have to constantly face the problem of margin call, premature liquidation and large unforeseen losses.

However, the beauty of buying options is that risk is just limited to the premium you pay while you still get to enjoy leveraged returns on your position. Sparrow options, being covered, helps to further protect users’ positions.

Let me give you an example:

If you forked out $1,000 Premium Payable for a 1 BTC buy Put position at a Strike Price of $10,000 and BTC settles at $12,000, your risk from the trade is just capped at your Premium Payable. In comparison, if you short BTC futures and BTC settles at $12,000 from $10,000, your loss will be $2,000 and potentially uncapped depending on how much BTC rallies.

Likewise, if BTC settles at $8,000 from your 1 BTC buy Put position at a Strike Price of $10,000, you will profit $2,000, which is 200% returns from your $1,000 Premium Payable.

This is as compared to shorting BTC at $10,000. When the price reaches $8,000, your profit is still $2,000, which is a mere 20% return from your $10,000 position. You also risk your whole capital by placing this trade, as compared to buying a Put option where your risk is limited to your Premium Payable.

Especially in this volatile crypto market, buying Put options will be your best bet if you want to take advantage of a bearish move.