1. How to operate options on the Web
- In the Gate Web interface, click on the “Contract” dropdown option, then click on “Options” below to enter the options chain.
- Choose the “bullish” direction; select an expiration date, for example, “250619”; then choose a strike price, for example, 101000.
- Click on the corresponding option, and the trading window will appear on the right side of the page, select the trading direction “buy, sell”, and click “Trade”.
How to choose options contracts:
- You can obtain a higher option premium with a high IV;
- The underlying asset has a good outlook;
- High capital attention, high options trading volume, good liquidity (reducing the spread);
- A variety of expiration dates and strike prices (beneficial for operation).
2. Options strategies that retail investors can choose from
1. Buy Call Options (Long Call) Applicable strategies for a bullish market, where investors purchase call options to gain upside potential at a relatively low option premium. If the underlying asset price rises, the option value increases, allowing investors to profit; if the price falls, the maximum loss is only the option premium.
2. Buy Put Options (Long Put) In a bearish market, the strategy involves investors buying put options to protect themselves from the impact of a decline in the underlying asset’s price, or to profit from the price drop. The maximum loss is the option premium.
3. Covered Call Strategy A strategy formed by a combination of the underlying holdings (BTC, ETH, etc.) and options. This strategy is suitable for holding the underlying assets but predicting that the stock price will drop in the short term, hoping to hedge risks through options.
4. Sell Put Options (Short Put)
Applicable to situations where one holds the underlying asset and has a long-term positive outlook on its development, expecting to increase the position at a lower price, by selling a put option with an agreed reasonable price as the strike price.
Selling options without holding the underlying stock is referred to as “naked short option”.
3. How to avoid major losses
1. Limit leverage and position size:
Do not overuse leverage, especially in uncertain market trends. Set an appropriate position size to avoid letting a single trade or options strategy occupy too much capital, which can reduce overall risk.
2. Use Protective Put Options:
For investors holding the underlying asset, they can purchase put options as insurance. If the market suddenly falls, put options can offset some losses, thereby protecting the value of the held assets.
3. Adopt a spread strategy:
Through spread strategies (such as bull spreads and bear spreads), one can control maximum losses while obtaining certain profits. For example, the bull spread strategy can profit in a bullish market, while losses will not exceed the paid option premium and spread cost.
4. stop loss and take profit settings:
Set stop loss and take profit points to avoid expanding losses. If the price of the underlying asset moves in an unfavorable direction, stop loss should be executed as soon as possible. At the same time, set reasonable take profit targets to lock in profits and avoid missing out on gains due to market volatility.
5. Hedging risk:
Hedging risks through different options combinations, such as holding both call options and put options simultaneously (like buying a straddle), can still allow for profits from fluctuations in uncertain market directions. This hedging strategy can help mitigate the impacts of market uncertainty.
6. Analyze volatility and timing selection:
Market volatility directly affects options prices. When volatility is high, option premiums are higher, which can lead to excessively high entry costs. Try to choose a time with moderate volatility to get on board the market, avoid overpaying for option premiums, and pay attention to the expiration time of the options to avoid exiting too early or too late.
