🔢Learning the Basics

This page contains educational content about options to help you get started with your options trading journey as soon and as prepared as possible.

Getting Started with Options

An option is a contract giving the buyer the right, but not the obligation, to buy (in the case of a call option contract) or sell (in the case of a put option contract) the underlying asset at a specific price on or before a certain date. Traders can use on-chain options for speculation or to hedge their positions. Options are known as derivatives because they derive their value from an underlying asset.

Options are powerful because they can enhance a trader’s portfolio. They do this through added income, protection, and even leverage. Depending on the situation, there is usually an option scenario appropriate for a trader's outlook. A popular example would be using options as an effective hedge against the declining prices of an asset to limit downside losses.

For more in-depth analysis of Options visit Investopedia's Options Trading Guide.

Why are options used?

Traders can use on-chain options as insurance on their trades, for speculation or to hedge their positions in the underlying assets. Options are known as derivatives because they derive their value from an underlying asset.

Options are powerful because they can enhance a trader’s portfolio. They do this through added income, protection, and even leverage. Depending on the situation, there is usually an option scenario appropriate for a trader’s outlook. A popular example would be using options as an effective hedge against the declining prices of an asset to limit downside losses.