Crypto options are similar to traditional finance (TradFi) options, except the underlying assets are crypto or crypto-related contracts. They can be used for hedging and provide leveraged exposure to price movements. However, options can be complex to understand and may lead to higher investment risks.
Compared to the crypto spot and futures markets, with $62 billion and $188 billion average daily trading volume in the past 12 months, respectively, the average daily trading volume of crypto options was ~$3 billion in the same period. The monthly volume grew by 47% from May 2024 to May 2025.
Centralised crypto exchanges (CEXs) had an average monthly trading volume of $97 billion over the past year, growing by 48% from $83 billion in May 2024 to $123 billion in May 2025. BTC options volume on CEXs almost doubled from the value a year ago. However, the options volume on decentralised exchanges (DEXs) dropped by 50% in the past 12 months.
Crypto options on TradFi exchanges also saw strong growth. Chicago Mercantile Exchange (CME)’s options on BTC and ETH futures monthly trading volume increased by 19% in the last 12 months, reaching more than $5 billion in May 2025. Cboe’s Bitcoin US ETF Index (CBTX) and Mini Bitcoin US ETF Index (MBTX) options’ monthly trading volume surged by 188% year-to-date, respectively, reaching a combined $1.8 billion in May 2025.
The complicated nature of options trading has limited the growth of the crypto options market. Crypto.com offers user-friendly, intuitive crypto options products like UpDown Options, Strike Options, and Dual Invest to broaden market participation and reduce entry barriers.
The growth of crypto options is constrained by their complex nature and high liquidity requirements for constructing strategies, making them less accessible than spot or perpetual futures for directional trading. Despite these challenges, options are valuable for hedging, and we anticipate the market will continue to grow, driven by institutional adoption and innovative products that leverage options’ complex strategies, while providing user-friendly experiences.
1. Introduction
Options are a type of derivatives in the financial market that give the holder the right, but not the obligation, to buy or sell a specific underlying asset at a set price (referred to as the strike price) up until a set expiry date. Crypto options are similar to the TradFi ones, with the underlying assets as crypto or crypto-related contracts.
Options Classification
There are different classifications based on different features:
Classification
Description
Types/Examples
Option Type
Right to buy or sell underlying asset.
Call: The right, but not the obligation, to buy an asset at the strike price.Put: The right, but not the obligation, to sell an asset at the strike price.
Exercise Style
When and how options can be exercised.
American: Can be exercised at any time before the expiration date. European: Can be exercised on the expiration date only.
Physical Delivery: Actual delivery of the underlying asset upon exercise.Cash-Settled: Settlement is made in cash based on the difference between the strike price and the market price.
Market Type
Where and how options are traded.
Exchange-traded funds (ETFs), OTC
Typical Option Strategies
In terms of option strategies, call options and put options give the holder the right, but not the obligation, to buy or sell an asset at a fixed price, respectively. Both can be entered into as a long or short position.
Long Call
Short Call
Holder can purchase the underlying asset at a specific strike price before expiration. Used when the holder is bullish, allowing them to profit from the upside while limiting risk to the premium paid.
Holder is obligated to sell at the strike price, if exercised, in return for receiving a premium.Holder profits only when the asset stays below the strike price; used when price is expected to decrease or stay flat.
Long Put
Short Put
Holder can sell the underlying asset at a specific strike price before expiration.Used when the holder is bearish, and can be used to hedge a long position.
Holder has the obligation to purchase the asset if the asset falls below the strike price.Often used when the holder is bullish and aims to earn a premium.
Perks and Pitfalls of Trading Options
Options are used for:
Hedging: Allows holders to control the risk of the portfolio or other existing positions. For example, a spot long BTC position can be hedged with a long put option, which allows the holder to sell the asset at a specific strike price.
Alternative investment tools: Theseprovide exposure to different market outcomes, where different option strategies can be constructed, which can lead to potential profits in all market movements (e.g., when price increases, decreases, or has high volatility).
Leveraged exposure to price movements: Allows holders to speculate on price changes with a relatively small cost (the premium); both gains and losses will be amplified due to leverage.
Source of income: Short options can generate income from premiums, although there are also risks associated.
However, there are also certain pitfalls associated with trading options.
Complexity: Options involve multiple considerations, including the strike price, implied volatility, premium, expiration date, etc., which are more complex than spot trading. Additionally, there are various strategies that can be considered.
Potentially larger risks: Shorting options can lead to scenarios with unlimited downside risks. For example, if the holder sells a call option without owning the underlying asset, and the price surges, they would theoretically be exposed to unlimited risks and owe the buyer (of the call option) the asset (which would be at a much higher price).
2.Crypto Options
2.1 Overview
There are three main types of crypto options in terms of the underlyingcontract:
Types
Examples
Key Features
Native
BTC/ETH options
Links to the spot price of the underlying crypto.Generally offered by crypto exchanges with 24/7 trading.Cash settled (in base currency or stablecoins).Lot size of 0.01 to 0.1 BTC (varies by exchange).Takes up the majority of the volume and liquidity in crypto options.
The underlying assets are crypto futures contracts.Fixed trading hours.Physically settled or cash settled.Lot size of 0.1 BTC (example of CME Micro BTC Options)
Options on Crypto ETFs
Options on BlackRock’s IBIT, Cboe Bitcoin US ETF Index Options
The underlying assets are crypto ETFs.Fixed trading hours.Cash settled (Cboe) or physically settled (IBIT options).Minimum lot size: 100 shares (in the case of IBIT).
Compared to the crypto spot and futures markets, with $62 billion and $188 billion average daily trading volume in the past 12 months, respectively, crypto options represent a small but growing market. Average daily trading volume of crypto options globally was ~$3 billion in the past 12 months. The monthly volume grew by 47% from May 2024 to May 2025.
2.2 Options on Crypto Exchanges
Centralised exchanges dominate the crypto options trading volume, with an average monthly trading volume of $97 billion in the past 12 months. In contrast, decentralised exchanges’ notional volumes were around $877 million in the same period, according to DefiLlama.
BTC dominated the crypto options market, accounting for over 80% of the global options trading volume.
2.3 Crypto Options in TradFi
TradFi exchange is another major player, which mainly offers options on crypto futures (e.g., CME) and options on crypto ETFs (e.g., BlackRock’s IBIT Options and Cboe Bitcoin US ETF Index Options).
US ETF Index: modified market-cap weighted index tracking US spot Bitcoin ETFs
Cash settled
European
Nasdaq
Options on BlackRock’s IBIT
iShares Bitcoin Trust
Physically settled in IBIT shares
American
Compared to native crypto options, these options offered by TradFi players generally do not directly track the underlying crypto assets’ spot prices and do not physically deliver any crypto during settlement. However, they open up opportunities for those who prefer to trade on traditionally established exchanges and do not want exposure to the underlying token, which can be a way to attract liquidity from TradFi traders.
CME’s options on BTC and ETH futures had an average monthly trading volume of $5 billion in the past 12 months, which is ~5% of the volume on native crypto exchanges. Additionally, Cboe and Nasdaq both listed options on crypto ETFs, which trade during regulated hours. Cboe’s CBTX and MBTX options had an average monthly trading volume of $1.3 billion year-to-date.
3.Options Trading on Crypto.com
Crypto.com offers three main crypto options products — UpDown Options,Strike Options, and Dual Invest.
Unlike traditional options, which can appear complicated with various pricing models, strategies, and expiries, Crypto.com’s products provide an easy trading experience for users while retaining the main features of options — hedging risks in the crypto market. Combining options with rewards, and other features like capping profits and losses, are also innovative ways to attract various users, depending on their investment needs.
UpDown Options and Strike Options are offered as US CFTC-regulated derivatives products under CDNA (previously known as Nadex).
UpDown Options
Strike Options
Mechanism
Automatically terminate if the underlying asset’s price hits a predetermined ceiling or floor price.
Present traders with a ‘yes’ or ‘no’ decision on price movements (e.g., whether traders think BTC will reach price $X by time Y).
Same as UpDown Options for two-hour options.5-minute options are only available for BTC and ETH.
Settlement
Cash settled
Cash settled
Expiries
Weekly or when the floor/ceiling is reached
Five minutes, 20 minutes, and two hours
3.1 UpDown Options
How It Works
AnUpDown Option terminates if the underlying asset’s price hits a predetermined ceiling (up) or floor (down) price. If the option expires without hitting the target/stop price, the trader receives a payout or incurs a loss, depending on the price at expiry versus the entry price. If the price hits the target or stop price, then the position is automatically closed.
Hence, traders can limit their profits and losses. When buying an option, the ceiling (target) price is the level that automatically takes profit (maximum profit), while the floor price (stop) is the level that stops losses (maximum loss). When selling an option, the reverse is applicable.
Advantages
UpDown Options provides built-in protection for traders, as profits and losses are capped. It also opens up the use of leverage to potentially increase returns (it also increases losses on the flipside) and serves as a hedge against the direction of traders’ existing positions.
3.2 Strike Options
How It Works
Strike Options presents traders with a ‘yes’ or ‘no’ decision on price movements. For example, suppose a trader is bullish about BTC and decided to buy 10 BTC Strike Options contracts with an expiry of two hours (five-minute and 20-minute options are also available). Assuming the BTC price is $100,000, the strike price is $101,000, and the buy price is $3.50 per contract (with a fixed contract value of $10), the trader would pay $35, excluding fees, for the 10 contracts. If BTC increased to $101,500 within two hours, meaning the trader predicted correctly, the profit would be (10-$3.50)*10 = $65.
Advantages
Unlike traditional options, Strike Options is easier to invest since it’s a ‘yes’ or ‘no’ prediction. Additionally, there is a clearly defined risk and reward, including maximum gains and losses. Traders can also flexibly exit early if market conditions change.
3.3 Dual Invest
In February 2025, Crypto.com launched an innovative feature called Dual Invest, which allows users to deposit one cryptocurrency while receiving returns in the same currency or another, depending on market conditions.
How It Works
In the chart below, we assume a current BTC price of $100,000, and a dual-invest pair of BTC as the deposit token and USDC as the alternate token.
Buy Low
Sell High
Hold
Strategy
User wants to buy BTC at $95,000
User wants to sell BTC at $105,000
User intends to hold BTC
Steps
Deposit 10,000 USDCSelect $95,000 target price 7-day term with 150% APR (example)
Deposit 1 BTCChoose 14-day term of 120% APR (example)
Select a price and term that BTC is unlikely to reach within the time frame.
Outcome
If BTC <$95,000: receive $10,000 USDC and rewards; both convert to BTCIf BTC >$95,000: receive 10,000 USDC deposit and rewards of 150% APR for 7 days in USDC
BTC >$105,000: BTC is converted to USDC plus rewards in USDCBTC <$105,000: receive 1 BTC and rewards of 120% APR for 14 days in BTC
Users earn rewards. However, there’s a risk that the BTC price may still be reached, depending on the price range chosen and market volatility.
Advantages
Dual Invest offers traders the opportunity to maintain exposure to assets while earning rewards. Traders can also enjoy flexible investment options (customisable target price, various term lengths, etc.) and capture opportunities regardless of market conditions.
4.Outlook
Relative to the crypto spot and broader derivatives market, development in crypto options remains in the early stages, with a small trading volume and limited product availability. BTC and ETH dominate the product offerings in TradFi, with a gradual expansion to altcoin options within centralised exchanges, including Crypto.com.
The differences in developmental pace can be attributed to the nature of options as an investment tool, as well as a lack of liquidity. Options in mature asset classes (e.g. equities) are commonly used as dynamic hedging instruments with strategies like long call/put spread, straddle, and strangle. These can be complicated to execute and require sufficient liquidity along the different strike prices and expiries. This makes liquidity needs for options exponentially larger than other derivative instruments due to the fragmented nature of the product. On the other hand, if investors want to find an instrument for easy directional trading, spot or perpetual futures trading may be more suitable.
However, options remain a powerful hedging and speculative tool in trading. On one hand, the market needs more innovative, user-friendly products to bring existing traders on board; on the other hand, attracting TradFi and institutional traders will also boost market liquidity. In the future, there is potential to consider an Automated Market Maker (AMM) design for options, where liquidity across multiple strikes or expiries are combined, which can further improve capital efficiency.
5. Conclusion
The foundational infrastructure for crypto options development is in place, including high speed blockchains with low transaction costs and efficient data feeds that can support options pricing. However, bottlenecks remain — most notably in areas of user experience and liquidity. For many retail users, options can still be a complex investment tool. At the same time, lack of liquidity and product availability can limit development of the crypto options market.
To address these challenges, Crypto.com offers user-friendly, intuitive crypto options products to broaden market participation and reduce entry barriers.
As the broader crypto derivatives market continues to evolve, we expect to see more institutional capital flow in, heightening the role of options as a hedging tool.
Crypto options are similar to traditional finance (TradFi) options, except the underlying assets are crypto or crypto-related contracts. Compared to the crypto spot and futures markets, crypto options still represent a small but growing market.
Crypto.com ile bir hesap oluşturmakiçin ayrıntılı kılavuzu inceleyin
Gönder düğmesine tıklayarak bu belgeyi okuduğunuzu kabul etmiş olursunuz. Crypto.com Gizlilik Bildirimi kişisel verilerinizi nasıl kullandığımızı ve koruduğumuzu açıkladığımız yer.
