Cryptocurrency trading has come a long way since its humble beginnings. What was once a niche trading instrument has now become one of the most traded and widely recognized asset classes in the world.  There are now various tools and strategies available to maximize profits and manage risks in crypto trading. One such tool is Crypto Up and Down Strike Options trading provided by Solus Finance, a platform known for its innovative crypto products. 

Before diving into how crypto up and down strike options work, let us first discuss what options are. 

What are the Options? 

Options refer to specific derivative contract agreements, where the holder has the right, but not the obligation, to buy or sell a specific underlying asset, (in this case crypto), at a set price up until a future “expiry” time. 

Users can go “short” when using options. This means that the trader will profit even when the prices go down. They can also use leverage to gain a larger exposure with a relatively small amount of invested capital. Options are normally used for hedging and forecasting price movements in crypto. 

What are Crypto Up and Down Strike Options?

Crypto up and down strike options are unique types of options available at Solus Finance. In this case, the option automatically terminates if the price of the underlying asset hits a predetermined “up or down” price, which can also be called a barrier price. 

This should not be confused with the “strike price” which is the price at which the option holder purchases or sells the asset if they use their right to do so. 

How do Crypto up-and-down Strike Options Work?

With crypto up and down strike options, traders can choose to buy or sell, depending on what direction they think the market will go. 

• Traders can buy an option to open a long position if they think the asset’s price will increase. 

• Conversely, they can sell an option to open a short position if they think the asset’s price is about to decrease. 

In both cases, the difference between the Target and Stop prices is the actual value of the option. The maximum loss the trader will incur is the cost they put into the trade, which is the difference between the current price and the Stop level. 

Let’s look at this with the help of an example. Suppose an underlying asset has a $20,000 current indicative price. In this case, the trader wants to take a long position on an option. The floor and ceiling price of the option is $19,900 and $20,400 respectively. 

This means that the value of the option is $500 ($20,400-$19,900). The trader knows this upfront, along with the maximum profit and loss that is possible.  So, in this case, the maximum loss is $100 while the maximum profit is $400.

How to Trade Crypto Up and Down Strike Options at Solus Finance? 

To get started with Solus Finance and trade up and down options, you first have to create an account on the platform. Next, transfer funds into your Solus Finance account, using either fiat currency or cryptocurrencies which are supported. Once this is done, head on over to the strike options page on the platform to begin trading. 

To trade up and down strike options, follow the steps below. 

• Select your cryptocurrency: Choose the particular crypto you want to trade options on, such as Ethereum or Bitcoin. 

• Select Option Type: Decide between buying a call option if you believe the price will increase, or a put option, if you believe the price will decrease. 

• Set Strike Price and Expiration Time: Next the strike price and expiration time need to be selected. The strike price is the level at which you want to buy or sell the cryptocurrency. The expiration time determines when the option will expire, based on hours or a specified duration.

• Pay the Premium: The premium refers to the cost of the option, which is to be paid to the seller. It depends on factors such as the crypto’s current price, the strike price and the time remaining till expiration. 

• Monitor Your Position: All you now need to do is keep an eye on the market and the performance of the option. You can either let the option expire if it doesn’t become profitable or can exercise the options if it becomes profitable. 

Why Trade Crypto Up and Down Strike Options at Solus Finance? 

Trading crypto up and down strike options at Solus Finance has a lot of advantages such as the following.

• Barrier Options and Risk Management

In case of up and down strike options, traders know their maximum profit and loss upfront, with clearly stated “barrier” prices. This protects traders from losses, as it automatically terminates when the stop price is reached. 

• Hedging Risk

Strike options also help a trader to hedge risk. How? – by simply opening a position that is opposite to the direction of their existing positions. Traders can hedge by taking a short position if they hold a particular crypto and believe that its price will decrease. As a result, potential losses are offset and there is no need for that crypto to be sold. 

• Full Price Exposure

As mentioned before, up-and-down strike options let traders make profits from the price movement of an asset without needing to own it fully. This costs less but gives the chance to benefit from all the price changes. For example, if BTC is $20,000 and a trader buys one up and down Option for $100, and the BTC price goes up by $200, the trader makes a $200 profit (excluding fees). But if the trader buys $100 worth of BTC directly, and the price increases by $200, the gain will be only $1, much smaller.

Conclusion

Solus Finance and its up-and-down strike options offer a flexible, yet profitable way to take part in the crypto market. Understanding these concepts clearly will help traders make informed trading decisions while enjoying their trading experience thanks to a very intuitive and user-friendly platform presented by Solus Finance.