How to Trade Options: A Complete Guide from Beginner to Expert

Why do I choose options trading over spot?

Honestly, I was attracted to options from the very beginning. Using less capital to leverage greater returns is very tempting for any trader. The key is that the risk is limited to the premium paid, which helps me sleep better.

Compared to directly holding spot, I found that options give me more flexibility. No matter whether the market goes up or down, I have ways to profit. And I don’t have to worry about liquidation nightmares. That’s the core reason I shifted to options trading.

What exactly is options trading? My understanding

Options, simply put, are contracts. They give you the right (but not the obligation) to buy or sell a certain crypto asset at a fixed price on a specific date. For example, Bitcoin(BTC) or Ethereum(ETH).

To obtain this right, you pay an upfront fee, called the premium. This fee is also your maximum possible loss. Imagine spending 100 units on a bet; if you lose, you only lose that 100, never more.

There are two basic types of options: call options and put options. One bets on the price rising, the other on it falling. I often switch between them based on market sentiment.

Call options: How I profit from upward movement

Call options are straightforward—if you think the coin price will rise, buy a call option. If the price really goes up, you can buy low and sell high, earning the difference.

Here’s an example from my own experience: I bought a BTC call option with an exercise price of 30,000 USDT, paying a premium of 200 USDT. Bitcoin actually rose to 32,000 USDT. My profit was 1,800 USDT, minus the premium, I earned 1,600 USDT. Awesome!

But what if BTC doesn’t rise and drops to 25,000 USDT? My loss is fixed at that 200 USDT premium, no more.

Put options: How I profit from downward movement

Put options are my secret weapon in bear markets. When I sense the price will fall, I buy a put option. If the price drops, I can sell at a higher price, profiting from the spread.

I’ve tried this: buying ETH put options with an exercise price of 2,000 USDT, paying a premium of 50 USDT. When ETH drops to 1,800 USDT, I earn a 150 USDT difference, after fees about 100 USDT profit.

Similarly, if ETH doesn’t fall or rises, my maximum loss is just that 50 USDT premium. That’s why I like options—the risk is controllable.

Features of a certain exchange’s options products

A major exchange offers European-style options, meaning these contracts can only be exercised at expiry. This design is quite considerate—I can close my position anytime before expiry to lock in profits or cut losses.

The platform supports options trading for BTC and ETH, both settled in USDT. The minimum trading amount is 10 USDT or 0.01 units of options, very friendly for beginners.

For example, the BTC-250131-75000-C contract represents a call option expiring on January 31, 2025, with a strike price of 75,000 USDT. This standardized format makes it easy to see contract details at a glance.

Fees and pricing mechanism

Trading fee is 0.03%, exercise fee is 0.02% or 10% of the profit on settlement amount, whichever is lower. These fees are quite competitive in the industry.

The premium represents my maximum risk. The platform uses the Black-Scholes model for pricing, ensuring fairness and transparency. I find this more reliable than some black-box pricing platforms.

My practical steps in options trading

Step 1: Open an options account

First, I log into the platform and find the options trading section. Then I pass a knowledge test and agree to the risk disclosure—this is necessary to ensure traders understand the risks.

Next, I transfer USDT into the options account. Transfers are free and very convenient. Sometimes I top up directly from the order interface without switching back and forth.

Step 2: Choose contracts and place orders

I usually select BTC or ETH, based on my market judgment, and decide whether to buy a call or a put. Then I pick an expiry date—generally between 7 and 30 days, balancing risk and time decay.

I input the quantity I want to buy. Here, I look at profit-loss charts to estimate potential gains or losses. After confirming everything is correct, I click to place the order.

Step 3: Manage and close positions

I often check my holdings. If the market moves against my expectations, I close early to cut losses. If I’ve made some profit, I might partially close to lock in gains.

If I hold until expiry, the contract will be frozen at UTC 07:00, then automatically settled at the weighted average price during the last 30 minutes before expiry, around 08:00. The result is credited in USDT to my account.

Three ways I make money with options

High leverage, low risk explosion: Using small premiums to leverage large profits is the biggest advantage of options over spot. I only need to judge the right direction to get several times the return.

Hedging with put options: I hold some BTC long-term but worry about short-term dips. I buy put options as insurance. If the price drops, the profit from puts can offset spot losses, keeping my mindset stable.

Arbitrage opportunities: I often observe deviations between options prices and spot prices. Sometimes I trade both calls and puts simultaneously, or combine with futures, to profit from volatility arbitrage.

My practical insights and advice

Honestly, options are more difficult than spot trading. You need to judge not only the direction but also the timing and magnitude. I lost quite a bit initially, mainly due to insufficient understanding of time decay.

My current advice is: beginners should start practicing with small amounts. That 10 USDT minimum is designed for you. Do several trades, understand the logic of options, then increase your investment.

Also, never risk all your funds on one position. My rule is to risk no more than 5% of the account per trade. Even if you’re wrong, you won’t lose much.

Frequently Asked Questions

Q: Which coins does the exchange support for options?
A: Currently mainly BTC and ETH. These have the best liquidity and most interesting volatility.

Q: Can I close positions early?
A: Of course. Although it’s European-style, you don’t have to wait until expiry. You can always open a reverse position to close.

Q: How is the strike price calculated?
A: Using the weighted average price during the last 30 minutes before expiry (UTC 07:30-08:00). This avoids extreme price impacts.

Q: What happens if I forget to close?
A: The platform freezes the contract at UTC 07:00 on expiry day, then automatically settles. If there’s profit, it’s exercised; if not, it’s forfeited. Results are shown in the settlement history.

Q: What’s the minimum amount to start trading?
A: Just 10 USDT or 0.01 units of options. This low threshold is especially suitable for small retail traders wanting to try options.

Q: How to recharge my options account?
A: Log in, go to Assets → Options Account → Recharge, then transfer USDT from your spot or trading account. Enter the amount and confirm—it’s free throughout.

Final words

Options trading changed my understanding of risk management. It’s not gambling, but a precise tool for hedging and leverage. When used well, it can greatly improve capital efficiency. When misused, it’s not like futures that can lead to liquidation.

If you want to enter the world of options, remember: start small, learn the theory first, and keep a good mindset. Wishing you smooth trading!