Feeling bullish? Buy a Call option. - page 3.

vennali

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Quote from: deisik on May 08, 2020, 02:06:40 PM

Quote from: vennali on May 07, 2020, 02:36:18 PM

What are your thoughts on Call Options and Options in general?

You run the systemic risk of a trading platform failure

Whether it be accidental or intentional, if the platform (exchange) you trade on folds, you lose money regardless of the current price and the direction it is headed. This risk is negligible in case of regulated exchanges like CME, NYMEX and their likes, the ones that are trading derivatives. However, with cryptocurrencies, it is something that you should always be aware of, actually, be afraid of (apart from outright price manipulation by the platform of your choice). Put differently, your bitcoins are yours only if they are in your personal wallet (read, it is you who holds the keys from it)

Well, thats with every platform to be honest. I agree that it is an added risk but, with crypto being legal in a lot of countries now. Its easier to have a fair trail against them in case of gross negligence. Earlier, they could just say "oops, we got hacked and lost all the coins" and dissolve without any course of action taken against them. Now, its not the case. Regulation certainly helps.

deisik

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Quote from: vennali on May 07, 2020, 02:36:18 PM

What are your thoughts on Call Options and Options in general?

You run the systemic risk of a trading platform failure

Whether it be accidental or intentional, if the platform (exchange) you trade on folds, you lose money regardless of the current price and the direction it is headed. This risk is negligible in case of regulated exchanges like CME, NYMEX and their likes, the ones that are trading derivatives. However, with cryptocurrencies, it is something that you should always be aware of, actually, be afraid of (apart from outright price manipulation by the platform of your choice). Put differently, your bitcoins are yours only if they are in your personal wallet (read, it is you who holds the keys from it)

vennali

legendary

Activity: 2338

Merit: 1081

#SWGT CERTIK Audited

f you think that prices will move up, and you want to trade 1 BTC worth of value but do not have 1 BTC, you can buy a Call option and profit from Bitcoin’s volatility.

Why buy Call?

Unlike spot trading which requires full collateral, buying a Call option allows you to participate in the movement of an underlying asset for a relatively small price (Premium Payable) while enjoying leveraged returns.

Here’s a scenario

You are bullish on BTC and expect it to trade above $6,000 on 26 June 2020
You can buy a Call for 1 BTC with Strike Price at $6,000, Settlement Date on 26 June 2020
The cost for making this position will be 1,211.07 SP$ (Premium Payable)

How do I profit?

In order to profit from your buy Call, BTC will have to trade above your Breakeven Price at Settlement Date
Breakeven Price is calculated as [Strike Price + Premium Payable]
In this scenario, Breakeven Price will be $7,211.07‬ (6,000 + 1,211.07)
The higher BTC trades above your Breakeven Price at $7,211.07 at Settlement Date, the greater your profit. Technically, your profit is unlimited
However, if BTC trades below $7,211.07 , your maximum loss will be limited to your Premium Payable (1,211.07 SP$), even if BTC goes to $0

What are your thoughts on Call Options and Options in general?

Topic: Feeling bullish? Buy a Call option. - page 3. (Read 778 times)