Learn what UpDown Crypto Options are, how ‘Target’ and ‘Stop’ levels work, and how to place and manage trades step by step in the Crypto.com App.
UpDown Options are contracts designed with built-in boundaries that automatically manage your exit points. It could appeal to those looking beyond spot trading to focus on short-term trends or protect an existing portfolio. This guide explains the mechanics of ‘Targets’ and ‘Stops’, plus other essentials to know before riding the ups and downs of the crypto market.
An UpDown Crypto Option is a specialized derivative contract that tracks the price of an underlying asset, such as BTC or ETH. Unlike traditional trading, where a position stays open until you manually close it, these options operate within a predefined price range. They settle automatically once a specific boundary is hit.
The core idea is directional exposure with capped risk. When you open a position, you’re choosing whether the price will move toward a higher ‘Target’ or a lower ‘Stop’. As the profit and loss levels are established before you enter the trade, you always know your maximum potential outcome from the start.
It’s important to note that trading derivatives involves significant risk and outcomes will vary based on market conditions and the specific contract selected. Users should ensure they fully understand the product mechanics before participating.
Every UpDown Option consists of four key components: The underlying asset, the direction (up or down), the price range (‘Target’ and ‘Stop’ levels) and the expiry date.
The range is the space between the floor and the ceiling of the contract. As the market moves, the value of your contract fluctuates based on that price action.
The ‘knock-out’ mechanic is the most distinctive feature. If the asset price touches either the ‘Target’ or the ‘Stop’ level, the contract terminates instantly. Hitting the ‘Target’ locks in your maximum profit, while hitting the ‘Stop’ triggers your maximum loss. This auto-termination provides a built-in exit strategy for managing volatility.
In the context of UpDown Options, buying and selling refer to the direction you expect the market to move. You’re not buying the actual cryptocurrency; instead, you’re taking a ‘long’ or ‘short’ position based on whether you believe the price will rise or fall relative to your entry point.
If you believe BTC’s price is likely to increase, you’d ‘buy’ an UpDown Option. In this scenario, your ‘Target’ is set above the current price and your ‘Stop’ is set below it.
For example, if you enter at $60,000, your goal is for the price to reach a ‘Target’ level of above $60,000 to realize a profit.
If you believe the BTC price is likely to decrease, you’d ‘sell’ an UpDown Option. This opens a ‘short’ position where your ‘Target’ is the lower boundary and your ‘Stop’ is the upper boundary. If the price moves down toward your lower ‘Target’, the value of your position increases, allowing for a potential profit.
Both directions carry inherent risks. While the knock-out boundaries limit your maximum loss to the initial cost of the trade, a sudden market move in the wrong direction can trigger a stop loss quickly. Knowing how to select a suitable range for your outlook is the next step in grasping the feature.
So far, you’ve learned that the ‘Target’ and ‘Stop’ levels represent the ceiling and floor of your trade.
How you define this range requires balancing your market outlook with current volatility. A tight range means the ‘Target’ and ‘Stop’ levels are close to the current price. While this requires a smaller price move to reach the ‘Target’, it also increases the likelihood of a ‘Stop’ knock-out from minor market fluctuations.
On the other hand, a wide range gives the asset more room to breathe. UpDown Options traders may find it useful during periods of high volatility or when the expected price move is significant. However, a wider range would require a larger price movement to reach the ‘Target’, which may take more time to develop.
The time horizon also matters. Short-term contracts may move more aggressively toward their boundaries, while longer-dated options provide more time for a trend to materialize. Always consider the asset's recent price swings when evaluating whether a specific range fits your current observation of the market.
Range isn’t a guarantee: The size of the range changes the risk profile and potential outcomes of a trade. A specific range doesn’t ensure success; it simply defines the boundaries where the trade will automatically conclude. |
Every contract carries a $1.00 ‘Exchange Fee’ and a $0.99 ‘Technology Fee’. When opening a position, these fees are added to your trade amount and debited from your USD Cash Account.
If you close the position manually or hit a ‘Target’, the fees are audited and deducted from your final credit.
A key safety feature is that if the position is knocked out exactly at the ‘Stop’ level, no additional fees are incurred. However, if you manually close a position near the ‘Stop’ level before the knock-out occurs, standard fees will still apply.
Imagine you want to buy one BTC contract when the current price is $30,000.
Indicative amount held: $50 (risk) + $1.99 (fees) + $5.00 (slippage) = $56.99 In this example, $56.99 is the total amount held from your account to open the trade. If the price hits the ‘Stop’ ($29,950), no additional closing fees are charged and your total loss is capped at $51.99 ($50 risk + $1.99 opening fees). |
The Crypto.com App simplifies this by grouping key contract details into a single view. Follow these steps to select and manage your first UpDown Option position.
1. Find the UpDown Options section
Open the Crypto.com App and navigate to the ‘Leverage’ tab.
If you’re a first-time user, you may need to complete an onboarding process to ensure you understand the risks associated with these products.
2. Choose your underlying asset
Select the cryptocurrency you wish to track. You can hold a maximum aggregate position of 250 contracts per underlying market (e.g., 250 for BTC and 250 for ETH).
3. Pick a direction
Select ‘Up’ if you expect the price to rise toward a Target, or ‘Down’ if you anticipate a drop.
4. Compare ranges
Review the available contracts. A wider range gives the price more room to move but may require a larger price shift to hit the ‘Target’.
5. Enter number of contracts
Specify how many contracts you want to trade. The App will display the ‘indicative amount held’, which includes the difference between the current price and the ‘Stop’ Level, plus fees and your set ‘Slippage Tolerance’ (default is $5).
6. Place your order
Confirm the details. Once filled, your position is live and will track the asset’s price in real time.
Orders are submitted as ‘Market Orders’ with protection on an Immediate-or-Cancel (IOC) basis. This means your order must be filled immediately at the displayed price (within your slippage tolerance) or it will be canceled.
7. Monitor or exit
View active trades in your ‘Positions’ tab. You can manually close early to secure a partial gain or wait for a ‘knock-out’ or expiry.
Common mistakes to avoidIgnoring the fees: Always account for open and close fees, as they can impact your net profit on smaller price moves. Misunderstanding knock-outs: Remember that touching either the ‘Target’ or ‘Stop’ ends the trade instantly. Overlooking expiry: A contract that doesn't hit a boundary will settle at whatever the price is when the timer runs out. Selecting the wrong direction: Double-check that your ‘Up’ or ‘Down’ choice aligns with your actual market prediction before confirming. |
A ‘knock-out’ occurs the moment the underlying asset's price touches either your ‘Target’ or your ‘Stop’ level. If the price hits the ‘Target’, the contract settles at its maximum value, locking in the profit. If it hits the ‘Stop’, the contract closes at its minimum value, resulting in the maximum loss for that position.
If neither boundary is touched before the contract's end, the trade reaches its natural expiry. In this case, the contract settles based on the asset's price at that specific moment. Your final outcome depends on where the price sits within the range relative to your entry point and any applicable fees.
Risks | Description |
‘Knock-out’ risk | High volatility can trigger your ‘Target’ or ‘Stop’ boundaries in seconds. A trade may conclude before a trend has had time to fully develop. |
Volatility and liquidity | Market conditions impact the ‘spread’ between buying and selling prices. During extreme price action, these gaps may widen, affecting your entry and exit levels. |
Fees and contract sizing | Since fees are fixed per contract, they can represent a large portion of a small trade's profit. Always align your contract size with your total risk tolerance. |
Emotional discipline | The automated nature of knock-outs is designed to manage exits, but it’s vital to avoid chasing losses by immediately opening new, larger positions after a ‘Stop’ is hit. |
Directional exposure | Unlike holding an asset in a spot wallet, these contracts require the price to move in a specific direction within a set timeframe. If the market remains flat, the contract still reaches expiry. |
Liquidity zone risks | Be aware of the low liquidity zone. Within the final three minutes of a contract, liquidity may decrease, making it difficult to manually close a position before expiry. |
Feature | UpDown Options | Traditional Options |
Boundaries | Fixed Target and Stop ‘knock-out’ levels. | No built-in knock-out levels. |
Risk profile | Capped risk; maximum loss is known upfront. | Risk can be complex (especially for sellers). |
Recovery potential | Trade ends instantly if a ‘Stop’ is hit. | Position stays open until expiry; can recover from dips. |
Simplicity | Directional (up or down) with a fixed range. | Involved ‘Greeks’ (e.g., Delta, Theta, etc.) and strike prices. |
Exercise style | Can be closed early or held to expiry. | Generally ‘American-style’ (can exit anytime). |
Don't let market volatility catch you off guard. UpDown Options can provide a structured way to participate in price movements with built-in exit strategies that work even when you aren't watching the screen.
Get started with UpDown Options.
Term | Explanation |
Target | The upper boundary (for buy) or lower boundary (for sell) where a trade settles for maximum profit. |
Stop | The boundary where the trade settles for the maximum loss. |
Knock-out | An event where the asset price touches a boundary, terminating the contract instantly. |
Range | The price difference between the ‘Target’ and the ‘Stop’. |
Settlement | The final calculation of profit or loss when a trade ends. |
Expiry | The predetermined date and time when a contract naturally concludes if no knock-out has occurred. |
Slippage tolerance | The maximum price difference you’ll accept to get an order filled (adjustable from $1 to $25). |
Are UpDown Options the same as binary options?
No. Binary options typically have a fixed payout (i.e., all or nothing) based on a simple yes or no outcome. UpDown Options have a value that fluctuates based on the underlying asset's price within a specific range until a boundary is hit or the contract expires.
What is the ‘indicative amount held’?
This is the total capital required to open the position. It covers the cost of the contract and represents your maximum potential loss. This amount is held by the exchange until the trade settles, at which point any remaining value is returned to you.
Can I lose more than my initial trade amount?
No. Your maximum risk is capped at the initial cost of the trade. The ‘Stop’ boundary ensures that you don’t lose more than your starting outlay.
What happens if the market price never hits the ‘Target’ or ‘Stop’?
If neither boundary is touched, the contract remains active until its scheduled expiry. At that time, it settles automatically based on the current market price of the asset relative to your entry point.
Can I close a trade before it hits a boundary?
Yes. You have the flexibility to manually close your position at any time before it hits the ‘Target’ or ‘Stop’. This allows you to lock in a partial profit or exit a trade early if your market outlook changes.
What does ‘knock-out’ mean?
It’s the instant termination of a contract when the price touches a boundary. This locks in your maximum profit (‘Target’) or triggers your maximum loss (‘Stop’).
What are some of the applicable fees?
Fees apply to opening a trade and manually closing or hitting a ‘Target’. Opening fees are non-refundable. However, if your position is knocked out at the ‘Stop’ Level, you won’t be charged an additional closing fee.
Are there trading hours for UpDown Crypto Options?
Trading opens at 5:00 a.m. ET every Saturday and closes at 4:00 a.m. ET the following Saturday.
Important information:
This article is for informational purposes only and should not be construed as financial or investment advice. Trading cryptocurrencies involves risks, including price volatility and market risk. Past performance may not indicate future results. There is no assurance of future profitability. Before deciding to trade cryptocurrencies, consider your risk tolerance.
UpDown Options are offered by Crypto.com | Derivatives North America, which is operated by the North American Derivatives Exchange, Inc. (Nadex) and subject to US regulatory oversight by the CFTC.
