Options

• Options: Options contracts are a type of derivative that grants options buyers access to leverage in crypto without getting liquidated, unlike perpetuals contracts. However, just like perpetuals traders must pay a funding rate to be able to trade on leverage, options buyers must pay something equivalent to options sellers called a premium to get access to leverage. As a result, selling options is commonly used as a way to earn yield by collecting premiums in exchange for being short volatility. Read more.

• Options Underlying: The asset upon which the option derives its value (ex: ETH, BTC).

• Options Collateral: The asset that collateralizes the options contract (ex: ETH, BTC, USDC).

• Option Type: Call or Put. Buying calls means you are bullish on price. Buying puts means you are bearish on price. More formally, a call option is the right to buy coins at a specific price by an expiration date, and a put option is the right to sell coins at a specific price by an expiration date.

• Option Strike Price: The price at which the options contract allows the underlying to be purchased at for calls and sold at for puts.

• Option Delta: Measures the rate of change of an option's price relative to a change in the underlying asset's price. Good approximation for how likely the option is to expire in-the-money, and by extension the yield and risk level. Read more.

• In-the-Money: The option is profitable. For calls this means that the call option strike price is below the spot price. For puts this means that the strike price is above the spot price.

• Out-of-the-Money: The option is not profitable. For calls this means that the call option strike price is above the spot price. For puts this means that the strike price is below the spot price.

• Option Expiry: When the options contract expires.

• Option Style: Mostly American and European. American options allow a trader to exercise their buy or sell an option at any time before the option's expiration date. European options specify that a trader can only choose to exercise (or not) his option on the date of expiration.

• Settlement Type: Either physical or cash-settled.