1EX Options is a simplified version of traditional options designed to improve the user's trading experience and lower the entry threshold for regular users. 1EX options are intuitive and flexible for traders.

Options are American style, meaning they can be exercised at any time before expiration. It is also worth noting that 1EX options are settled in cash. Therefore, physical delivery of the underlying asset is not required.

To date, 1EX Options only tracks one underlying asset, the BTCUSDT perpetual contract on 1EX Futures.

An option contract will remain in effect as long as the holder does not exercise the option at any time before or before expiration. Consequently, users do not have access to the order book, since the only way to exit the contract is to settle on the option.

How is a 1EX option different from traditional options?

In traditional options markets, a trader can be a buyer or a seller. For example, the writer of an option has the right to buy or sell the underlying asset at a predetermined price before expiration. On the other hand, option buyers are counterparties who are obligated to deliver the underlying asset to the option buyer at a predetermined price.

On our platform, 1EX is the sole issuer of the product. Thus, users can only be buyers of 1EX options. As option buyers, 1EX users, unlike traditional option sellers, are not exposed to unlimited risk. The maximum possible loss on 1EX options is the premium paid for the options.

1. Intuitive and simple design

Traditional options products typically offer multiple ranges of expiration dates and strike prices. Therefore, one underlying asset is often tracked by hundreds of option contracts.

This market structure creates a fragmented liquidity picture, where out-of-the-money contracts far from the expiration date are illiquid. Thus, trading such contracts can cause problems in the execution of trades.

In contrast, options on 1EX provide only one strike price, equivalent to the BTCUSDT perpetual contract price on 1EX Futures. Thus, users do not have to choose from a range of strike prices and expiration dates. In other words, 1EX options are always in the money.

Traditional options have a long expiration date of 100 days or more. 1EX options, in contrast, have shorter expiration times of 10 minutes to 1 day. Thus, 1EX options provide users with a wider choice of trading strategies.

2. Risk and Reward Profile at 1EX Options

Due to the short duration, 1EX options can be compared to binary options. However, such a comparison would be incorrect as 1EX options do not accept the fixed redemption structure built into binary options.

In the case of 1EX options, the expected payout changes. As the price of the underlying asset goes beyond the breakeven price, 1EX Options offers unlimited upside potential with limited risk. In other words, the profit from options on 1EX is unlimited.

Despite the differences between options on 1EX and traditional options, the risk and reward profile of 1EX Options has similar characteristics to traditional options.

As the price moves above or below the strike price, the payoff of the option changes accordingly. If, at the expiration of the option, the underlying asset does not move beyond the strike price, then the option expires.

The breakeven point will be the strike price plus/minus the premium (depending on the call or put option).

How is 1EX Options different from existing crypto options?

The most significant difference between 1EX options and existing crypto options is that 1EX options are American style while existing ones are European style. American style options allow traders to use them at any time before expiration. In traditional markets, American-style options typically cost more than others because of the flexibility they offer. Thus, American style options often trade at a premium to European options.

1. Liquidity and volume

Existing crypto options markets have extremely small order books and low liquidity. This can be seen in daily trading volumes on existing cryptocurrency options platforms.

Bitcoin options daily trading volume

Most of the time, the total daily volume of Bitcoin options is less than $100 million, which is a significant difference compared to the daily volume of Bitcoin futures that averages $1.5 billion.

One reason for low liquidity and volume is the lack of option sellers who act as counterparties to buyers. This is not surprising given the high capital requirements associated with selling options, which limits the participation of retail traders. Thus, trading in illiquid options markets creates various problems, including wide bid-ask spreads and exercise risk.

Daily volumes of Bitcoin options on 1EX, Deribit and OKex (in millions)

The 1EX platform, in contrast, handles a huge amount of options and has an unlimited supply since 1EX is the sole issuer of the product. As shown in the chart, daily option volumes on 1EX have grown significantly since launch. In fact, the 1EX Options platform has surpassed existing crypto options in terms of daily volume.

2. Bonus and commissions

On 1EX Options, the strike price is equivalent to the price of a BTCUSDT perpetual futures contract. Thus, the strike price may vary depending on the price of the underlying asset. For this reason, premiums will also vary. Therefore, it is not possible to directly compare 1EX Options with existing European-style options that are designed in a different way and have a predetermined strike price.

However, under conditions where both options have the same strike price, the premiums will be equal. In fact, when considering the total cost of purchasing an option and the flexibility that American style options offer, 1EX Options may be the cheaper choice.

To illustrate the difference, let's consider a scenario where a trader wants to buy BTC options at the current spot price of $6,875.

Unlike existing options platforms, 1EX Options is simple and intuitive. 1EX Options makes options trading easier because it eliminates the need to keep track of multiple expiration dates and exercise prices.

Traditional option products tend to be less liquid. To avoid this, 1EX options are designed with a single strike price to concentrate liquidity on one contract. As such, 1EX options are competitively priced and offer high liquidity.

The 1EX Options platform offers access to high leverage without the risk of liquidation. It also offers limited downside risk because the option buyer's maximum loss equals the premium. Users can use this tool to capitalize on short-term price fluctuations or to mitigate risk on underlying assets.