Binance offers a diverse range of investment products for traders looking to expand their strategies. Beyond spot and margin trading, the exchange provides access to derivatives like options contracts. This guide will walk you through the essentials of trading options on Binance, from basic concepts to step-by-step execution.
What Are Options Contracts?
Options contracts are derivative products that grant traders the right—but not the obligation—to buy or sell an asset at a specified price before a set expiration date. Unlike futures, options provide flexibility, as traders are not forced to execute the trade.
Binance offers two primary types of options:
- Call Options: Give the holder the right to buy an asset at a predetermined price. Traders use these when they anticipate a price increase.
- Put Options: Give the holder the right to sell an asset at a predetermined price. These are used when expecting a price decline.
Binance supports American-style options, which can be exercised at any time before expiration. This differs from European-style options, which can only be exercised on the expiration date.
Uses of Options Contracts
While options can be used for speculation, they are commonly employed for hedging—a risk management strategy. For example, cryptocurrency miners might use put options to protect their holdings against potential price drops. If the market declines, gains from the put options can offset losses in their portfolio.
However, options trading involves complexity and risk. Beginners should start with small amounts and thoroughly understand the mechanics before committing significant capital.
Note: Options trading on Binance is linked to your Futures account. Actions in options may impact open futures positions, so exercise caution to avoid unintended effects.
Key Concepts in Options Trading
Before diving in, familiarize yourself with these fundamental terms:
- Premium: The cost of purchasing an options contract, deducted from your Binance Futures wallet balance.
- Expiry Date: The time until the contract expires. Binance offers durations of 10 minutes, 30 minutes, 1 hour, 8 hours, and 1 day.
- Strike Price: The predetermined price at which the asset can be bought or sold.
- Close Price: The price at which the option is exercised (also known as the settlement price).
Unlike traditional markets, Binance Options do not use an order book. Purchased options remain valid until exercised or expired.
How to Trade Options on Binance Web
Follow these steps to trade options on the Binance desktop platform:
- Log in to your Binance account or register if you don’t have one.
- Navigate to Derivatives > Options.
- Register for a Binance Options account if you haven’t already.
- Transfer funds from your Exchange wallet to your Options wallet.
- Choose between available call or put options.
- Enable the trading panel and select order type, price, and amount.
- Click Buy to open a position.
To close a position, you can:
- Hold until expiration.
- Use the Close mode in the trading panel.
- Click Close directly under Positions.
How to Trade Options on the Binance Mobile App
The mobile app provides a streamlined options trading experience:
- Download the Binance app for iOS or Android and log in.
- Activate your Futures account (required for options trading).
- Go to the Trades tab and select Options.
- Ensure your Futures wallet is funded. Transfer funds if necessary.
- Choose an expiry timeframe (e.g., 10 minutes, 1 hour, 1 day).
- Specify the contract size in the underlying asset (e.g., BTC).
- Pay the premium in USDT and click Buy Call or Buy Put.
- Confirm the transaction details to open the position.
Monitoring and Closing Positions
Track open positions under the Positions tab, where you can view time remaining until expiration and unrealized profit/loss. To close a position early, click Settle and confirm. Historical trades can be reviewed under the History tab.
Frequently Asked Questions
What is the difference between call and put options?
Call options give the right to buy an asset at a set price, while put options give the right to sell. Calls are used for bullish expectations, and puts for bearish ones.
Can I exercise an option before expiration on Binance?
Yes, Binance offers American-style options, which can be exercised at any time before expiry.
How is options trading related to my Futures account?
Options activity is tied to your Binance Futures wallet. Premiums are deducted from this balance, and positions may affect your overall risk profile.
What happens if my option expires?
If unexercised, the option becomes worthless, and you lose only the premium paid.
Are options suitable for beginners?
Options involve significant risk and complexity. New traders should start with small amounts and prioritize education.
How can I practice options trading risk-free?
👉 Explore demo trading platforms to simulate options strategies without financial exposure.
Conclusion
Binance Options provide a flexible way to speculate or hedge against market movements. Unlike futures, options allow traders to choose whether to execute the contract, offering greater control over risk. However, success requires a solid understanding of mechanics and a disciplined approach to risk management. Beginners should proceed cautiously and use educational resources to build confidence.