Calls and Puts in Crypto Options: What They Mean
A call is the right to buy crypto at a set price, and a put is the right to sell it. Each contract has a strike, an expiration date, and a premium.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
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In crypto options, calls and puts are contracts based on coins such as bitcoin or ether. They let you act on a price view without owning the coin. The contract gives you a right, not an obligation, and it can expire without being used.
How Crypto Options Work
Every option contract has a strike price, an expiration date, and a premium. The strike is the set price where you can buy or sell the coin. The premium is the amount you pay upfront for the contract. Settlement can be in cash or in coins, depending on the exchange and contract.
How People Use Crypto Options
A trader who holds bitcoin or ether can use a put to hedge against a price drop. A call can be used to bet on a price rise without buying the coin. Some traders use both calls and puts to manage a position.
What Risks Do Crypto Options Carry
The buyer of an option can lose the entire premium if the option expires worthless. That happens when the strike price is not useful before expiration. The seller of an option can face larger losses.
Are Crypto Options Regulated in the US
In the United States, some crypto options trade on venues regulated by the Commodity Futures Trading Commission. Offshore exchanges may offer crypto options with fewer investor protections.
Frequently asked questions
If it is in the money, it may be exercised or settled in cash. If it is out of the money, it expires worthless and you lose the premium.
The IRS treats crypto as property, so option gains and losses are usually capital. The timing can differ from a spot trade.
American options can be exercised before expiration. European options can be exercised only at expiration.
