Cryptocurrency exchange OKEx rolled out ether options on June 4—with EOS set to follow later this month.
The exchange and derivatives trading platform’s new ETH/USD and EOS/USD pairings come off the back of BTC/USD options, which appear to have been popular. Data from Skew suggests this particular financial instrument has achieved average daily transaction volumes exceeding $10 million.
Options give the owner the opportunity, but not a requirement, to buy or sell an asset at a pre-agreed price. A call option potentially means a trader could pick up some ETH for lower than the market rate, while put options can help mitigate losses. These instruments are different from futures, where the bearer is obligated to fulfill the contract when it expires.
“The launch of the ETH/USD options provides our users with more trading tools to fulfill their needs of executing different trading strategies,” OKEx CEO Jay Hao said in a June 4 release. “Based on the success of the OKEx BTC/USD options, we are confident to bring users a better options trading experience.”
The company added that ETH/USD options could provide a low-cost way of hedging risk, especially considering the levels of volatility often seen in the crypto markets.
OKex does not serve American investors, who only got the ability to trade ETH futures on May 12, when ErisX added them to its lineup.
Derivatives such as options and futures have long been a fixture on the stock markets and in commodities, but they are much less commonplace in crypto. This is beginning to change—and OKEx’s hope is that a greater variety of crypto derivatives will “attract institutions and professional traders to pay attention to cryptocurrency.”