1. Understanding Options
Options are financial derivatives that grant the buyer the right (but not obligation) to buy or sell an underlying asset at a predetermined strike price on or before an expiration date.
Key Features:
- Buyer (Holder): Pays a premium for the right to exercise the option if profitable.
- Seller (Writer): Obligated to fulfill the contract if exercised.
Basic Terminology:
| Term | Definition |
|---|---|
| Underlying Asset | Asset tied to the option (e.g., BTC/USD index). |
| Expiration Date | Date when the option expires. |
| Strike Price | Predetermined price for buying/selling the asset. |
| Contract Types | Call (buy right) / Put (sell right). |
| Exercise Style | European (exercise on expiry only) / American (exercise anytime). OKX offers European-style options. |
Moneyness Classification:
| Contract Type | Condition | Classification |
|---|---|---|
| Call Option | S > K | ITM (In-the-Money) |
| S < K | OTM (Out-of-the-Money) | |
| S = K | ATM (At-the-Money) |
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2. OKX Options Contract Specifications
| Feature | Detail |
|---|---|
| Contract Types | Calls & Puts |
| Exercise Style | European |
| Expirations | Daily, Weekly, Monthly, Quarterly cycles. |
| Underlying Assets | BTC/USD, ETH/USD indices |
| Contract Size | 1 BTC / 1 ETH |
| Settlement Coin | BTC / ETH |
| Tick Size | Varies by option price tier. |
| Mark Price | Calculated via Black model with real-time volatility data. |
| Expiry Time | 08:00 UTC on expiration date. |
| Settlement Price | TWAP of index price 1 hour pre-expiry. |
Trading Hours: 24/7
Fees: Refer to OKX’s fee schedule.
3. OKX Options vs. Futures
| Aspect | Options | Futures |
|---|---|---|
| Obligation | Buyer: Right only. Seller: Obligated if exercised. | Both parties must settle. |
| Margin | Seller posts margin; buyer pays premium. | Both post margin. |
| Risk | Buyer: Loss ≤ premium. Seller: Unlimited loss. | Unlimited risk/reward for both. |
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FAQ Section
Q1: Can I exercise OKX options before expiry?
A: No. OKX offers European options, exercisable only at expiry.
Q2: How is the settlement price determined?
A: It’s the time-weighted average price (TWAP) of the underlying asset 1 hour before expiry.
Q3: What’s the maximum loss for an option buyer?
A: Limited to the premium paid.