What are the pain points of options (the biggest pain points of options)?

What are the pain points of options? In the traditional investment market, both buyers and sellers of options have a common point, which is that the price volatility is too high. The main characteristic of option trading is that the buyer hedges market risks (such as bullish/bearish trends); the seller determines the price spread and deadline by purchasing underlying assets and given dates, thereby gaining profits. The settlement mechanism of options is also composed of futures, thus forming a “delivery contract”. That is to say, when a user requests to use options or buy bearish commodities from a certain exchange, the investor will include the order in the contract for placement. The pain points of options are what? Options are a derivative product that represents a right obligation or an asset form of specific financial instruments such as stocks. However, compared with Bitcoin, Ethereum has high transaction fees and extremely low costs, making options more easily become a game for speculators.

The biggest pain points of options

According to OKEx data statistics, from 6:40 pm to 7 pm on Friday of the week ending on December 31st, BTC prices rose by more than 20% in 5 minutes, with a total position of 1.4 billion US dollars, more than doubled from the previous week. ETH and LTC, on the other hand, fell by more than 12%, 10%, and 16% respectively. Although recent surges in ETH are related to options, for most traders, the most painful aspect of options trading is actually the act of trading options – because people tend to choose to short instead of buying options to profit. This approach is reasonable after all, as futures contracts allow investors to gain additional benefits, so now we just need a simple “bet”, which is impractical, therefore options trading is straightforward. Arbitrage opportunities: Generally, arbitrage behavior in options trading mainly occurs on the Hong Kong Stock Exchange. In the past few months, “arbitrage robots” have been using the low-cost advantage of off-exchange transactions to transfer funds to the market. In other words, if someone makes a lot of money through spot trading and sells some coins and then transfers the coins to the market, it can cause a liquidity crisis or loss. Arbitrage strategies: Since the price of Bitcoin is in a long-term consolidation phase, arbitrage is often not for making money but rather to exchange for stable returns with more cash, and settlement often occurs in a short-term manner. For example, in October last year, such a thing happened, which caused the price of Bitcoin to soar from about $4,000 to about $6,000, and it has not risen much for several months in a row. Arbitrage strategies: In general, arbitrage opportunities include buying or selling a large amount of coins in the spot market, which will be trapped, thus creating greater profit space. In some cases, arbitrage can also last for a while until the price returns to around $3,000 before it explodes again. Market maker risk control: “If you want a cheaper price, you must provide margin.” In the cryptocurrency world, market-making institutions have a higher risk appetite, especially in terms of volatility and leverage rate. Arbitrage opportunities: Within a specific time period, you hope to use a method that can reduce costs, that is, to pay a certain proportion of options fees to others. In the current market environment, your position is represented by a single entity, and the amount to be borrowed and the purchased price are held by a single entity, such as an options trader. The user may need to use a certain method to improve its capital efficiency. Most trading platforms in the market are currently offering such products.