Crypto Put Options Compare

Additional Useful Information

• Settlement period is quick in options transactions. All settlements are done within 1 day of the transaction.

• When the option buyer is in a position of profit at any time up until the option expires, the option is said to be ‘in-the-money’.

• If the option buyer is in a position of no profit, no loss at any time up until the option expires, the option is said to be ‘at-the-money’.

• If the option buyer is in a position of loss at any time up until the option expires, the option is said to be ‘out-of-the-money’.

• Generally, these underlying coins are Bitcoin, Ethereum, and other major altcoins.

Returns *

• Put Options are considered by many as high-risk high reward financial instruments.

• Options trading is a zero-sum game. This means that whenever a participant makes a profit, there will be an opposite participant who will make the exact same loss. This would mean that options returns vary from individual to individual and it depends heavily on the skill of the market participants to accurately gauge the future trend of the underlying coin.

• A put option makes money when the underlying coin’s price drops below the strike price, allowing the option holder to sell at that higher price. Conversely, the option buyer incurs a loss if the underlying coin’s price rises above the strike price, forfeiting the premium paid to the seller.

• The put option seller faces a loss if the underlying coin’s price drops below the strike. They're obligated to purchase the coin at a higher price. Conversely, they profit if the underlying coin’s exceeds the strike, as the buyer won't exercise the right to sell at the strike. In this scenario, the seller earns the premium as profit.

• Options can be sold before expiry by the buyer. This could result in a gain should an investor use this instead of waiting until expiry.

Risk Level

• Crypto Options trading is generally very high-risk investing.

• The main risk is the price risk, that is, price of underlying asset changing unfavourably due to market conditions.

• Crypto Options trading frequently involves leverage. This can magnify losses or gains which make options very high-risk investments.

• It is always worth doing thorough due diligence on an individual level on every options contract under consideration.

Liquidity

• Options trading/investing is very liquid.

• This is because Options are derivatives which have an expiry date. This means that no investors will be forced to hold on to the investment for an indefinite period. Investors can either sell the options in the markets or wait till the expiry date.

Interesting Facts

• Options are a convenient way to get exposure to coins without holding them. Only an upfront premium is required to gain exposure.

• Crypto markets are worldwide. Transactions can occur with any potential investor around the world. For this reason, cryptocurrencies trade 24/7.

• The use of blockchain secures almost all cryptocurrencies. All transactions are kept a tab on and verified by this technology. This means that there is no scope for alteration of records of the transactions and the chances of fraud drop.

• Cryptocurrency is a good way to diversify an investment portfolio. This is because the correlation of cryptocurrencies with traditional investments is not perfect. This means they do not always move in similar directions.

• Not only for paying for goods and services, but cryptocurrency can also be used for donations, tipping, gifting, etc. Cryptocurrencies have a wide range of uses.

• Sophisticated traders use various options strategies to profit from their view. These strategies include covered call, protective put, collars, spreads, etc.

Tax Implications

• Profits from cryptocurrencies are taxed at a flat rate of 30% in India.

• There is a 4% cess added as well to the 30% tax.

• Short term capital gains and long-term capital gains are taxed similarly. There is no tax differentiation based on the gains.

• Long term capital losses can be offset with long term capital gains. This avoids any tax on the gains.

• Section 194S levies 1% Tax Deducted at Source (TDS) on the transfer of crypto assets from July 01, 2022, if the transactions exceed ₹50,000 (or even ₹10,000 in some cases) in the same financial year.

Where To Invest

• https://www.delta.exchange/

• https://www.binance.com/en-IN/e/bitcoin_futures