Binance lists European-style bitcoin options to compete more directly against Deribit
December 28, 2020, 8:45AM EST
1 min read
Crypto exchange Binance has listed European-style bitcoin options that would put the exchange in more direct competition against Deribit.
Binance already offers American-style bitcoin options. The new offering means traders will have more choices. The difference between the two styles is that American options can be exercised at any time before expiry, while European options can only be exercised at expiry, although they can be sold back on the market before expiry.
Binance said American-style options' ability to be executed at any time often results in a higher premium, while European-style options' pricing can be lower in comparison. Some users may find European-style options more suitable according to their needs and trading strategies, the exchange said.
The new options settle in Tether (USDT) and come at a time when both bitcoin and the bitcoin derivatives market are surging. Bitcoin is currently trading at around $27,250 levels. Binance said with the increasing institutional demand of bitcoin, there is a fast-growing need for hedging products such as options. "Users can both buy the options for hedging and trading, as well as write and sell options as an issuer," said the exchange. Binance’s American-style options do not allow users to write the options themselves.
As for the surging bitcoin derivatives market, earlier this month, bitcoin options' daily trading volume crossed the $1 billion mark for the first time. Crypto exchange Deribit currently leads the market with more than 75% share, followed by Bit.com and OKEx, according to tracker Skew. It remains to be seen whether Binance's share increases with the new product.