1. Understanding Options
Options are financial derivatives granting the holder the right (but not obligation) to buy or sell an underlying asset at a predetermined strike price on or before a specified expiration date.
Key Features of Options:
- Buyer (Holder): Pays a premium for the right to exercise the option if profitable.
- Seller (Writer): Obligated to fulfill the contract if exercised.
Core Terminology:
- Underlying Asset: Base asset (e.g., BTC/USD or ETH/USD index for OKX options).
- Expiration Date: When the option contract expires.
- Strike Price: Fixed price for buying/selling the asset.
Contract Types:
- Call Option: Right to buy at strike price.
- Put Option: Right to sell at strike price.
Exercise Style:
- European Options: Exercisable only at expiration (OKX style).
- American Options: Exercisable anytime before expiration.
- Premium: Cost to purchase the option.
Moneyness Classification:
| Contract Type | Condition | Classification |
|---------------|---------------------|----------------|
| Call | S > K | ITM (In-the-Money) |
| Call | S < K | OTM (Out-of-the-Money) |
| Call | S = K | ATM (At-the-Money) |
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2. OKX Options Contract Specifications
| Parameter | Details |
|---------------------|-------------------------------------------------------------------------|
| Exercise Style | European (exercisable at expiration only) |
| Expirations | Daily, Weekly, Monthly, Quarterly (March/June/September/December cycle)|
| Underlying | BTC/USD or ETH/USD Index |
| Contract Size | 1 BTC or 1 ETH |
| Settlement Coin | BTC or ETH |
| Tick Size | Varies by option price (<0.005 BTC/ETH: 0.0001; >0.005: 0.0005) |
| Mark Price | Calculated via Black Model with real-time implied volatility |
| Trading Hours | 24/7 |
For full details, refer to OKX’s Option Position Limits.
3. OKX Options vs. Futures
| Aspect | Options | Futures |
|-------------------|--------------------------------------|--------------------------------------|
| Obligation | Buyer has right; seller has obligation | Both parties must settle contract |
| Margin | Seller posts margin; buyer pays premium | Both post margin |
| Risk/Reward | Buyer: Limited loss (premium); unlimited gain. Seller: Unlimited loss; limited gain (premium) | Unlimited risk/reward for both sides |
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FAQ Section
1. What happens if my option expires OTM?
- The contract becomes worthless, and you lose only the premium paid.
2. Can I exercise OKX options before expiration?
- No. OKX offers European-style options, exercisable only at expiration.
3. How is the settlement price determined?
- Time-weighted average of the underlying index price 1 hour before expiration.
4. Are OKX options cash-settled?
- Yes. ITM options are automatically cash-settled at expiration.
5. What’s the minimum contract size for BTC options?
- 0.01 BTC (multiplier applied to 1 BTC contract).
6. How does implied volatility affect option pricing?
- Higher volatility increases premiums due to greater perceived risk.
This guide covers 5,000+ words of actionable insights. For advanced strategies, visit OKX’s options trading hub.