Unlike a futures contract, an option gives its holder a right but not an obligation to buy or sell an underlying asset at a certain price and date. That makes options a perfect pick for capitalizing on the bear market. And the harsh reality is that we are currently in a deep bear zone that can last as long as inflation remains in place, crypto analysts say. So, maybe now is the right time to cushion your losses or even make more money on options, being greedy when others are fearful? If you are reading this, you probably thought the same.
The problem is that the options market is much smaller and less mature compared to futures. It’s often significantly less liquid, and bigger trades can take longer to settle. Popular exchanges like Binance, FTX, and KuCoin allow for options trading, but the volumes are really small, perhaps amounting to just a couple of ETH or BTC per day. Although in TradFi these contracts are used by 80% of institutional investors, in the crypto industry there are simply not so many brokers for options-only trading due to the crypto market still being relatively small.
But that doesn’t mean there are no good options trading platforms at all! In fact, some of them have been present on the market for quite a long time and established themselves as reliable derivatives brokers. Keep reading to find out which are the best options trading platforms and what are their pros and cons.
Founded in 2016, Deribit is a centralized exchange based in the Netherlands. Perhaps the most popular platform for crypto derivatives trading, Deribit carefully carved its reputation as a reliable and liquid broker.
The platform offers European-style Bitcoin and Ethereum options, which means that the contracts can’t be executed before the expiration date. Deribit also offers crypto futures, including fixed expiry ones and perpetuals. The contracts are settled in cash instead of the underlying asset.
- Used by institutional investors such as Paradigm
- Accounts for nearly 90% of all crypto options trading volume
- Leverage as high as 50x
- Strong and transparent team
- Insurance fund in case of exploit
- Deposits available only in BTC
- KYC verification
- A complex interface that may be difficult to use for beginners
- Not many cryptocurrencies are available compared to futures
Lyra is a decentralized options trading protocol running on Ethereum’s L2 Optimism. Lyra claims it combines the best of traditional options market making with crypto’s scalability and composability. Being unbounded by constraints of L1, the protocol boasts low transaction fees and a lightning-fast trading experience.
- Simple and intuitive interface
- Lack of KYC
- Backed by renowned investors including Framework Ventures, Parafi Capital, Hasu, and Aave founder Stani Kulechov
- Relatively modest liquidity
- Not too many cryptocurrencies available for options trading (Bitcoin, Ethereum, Solana, Chainlink)
- Traders need to swap ETH for synthethix USD stablecoin (sUSD)
Premia is a decentralized options protocol with about $8m in TVL. The protocol has passed the audit procedures of Hacken and Solidity, which are known for their rigorous security procedures. Premia’s total trading volume on all blockchains exceeds $120m, an impressive achievement for a startup founded in 2020.
- Simple interface with PnL estimates
- Runs on multiple blockchains, including Arbitrum, Fantom, and Ethereum mainnet, with Avalanche, Polygon, and Optimism coming soon
- Liquidity pools and token swaps are available as well
- No KYC
- Every blockchain has different cryptocurrencies available for options trading
- Low TVL and trading volume
- Due to the early stage of the project, it’s hard to determine future performance
FTX US Derivatives (formerly LedgerX)
FTX US Derivatives is a centralized crypto options trading platform acquired by FTX in 2021. Founded in 2014, the platform boasts a $50m volume within a single trading day. FTX US Derivatives is available to both retail and institutional investors, offering a physical settlement of all contracts, block trading and algorithmic trading opportunities for institutional investors, and direct access for all traders.
The platform is regulated by the US Commodity Futures Trading Commission (CFTC) and backed by some of the big names in the cryptosphere, including Digital Finance Group, Lightspeed Venture Partners, Miami International Holdings, Google Ventures, SV Angel, and others.
- The platform offers Mini and Deci options for a fraction of the coin
- Regulated by CFTC
- Acquisition by FTX adds weight to the reputation
- Available for US citizens only
- KYC verification
- Complex interface
- Options only for Bitcoin and Ethereum
A freshly launched decentralized platform, Logium claims it solves the problem of decentralized finance and opens the absolutely free market for derivatives accessible by all investors across the world. The platform allows customers to use 5x leverage and trade long or short any token listed on Uniswap, giving access to over 500 cryptocurrencies. Options are settled after a fixed time span, which can be 1 hour, 6 hours, 1 day, 7 days, or 1 month. Logium doesn’t hold any assets of its users as all trades executed on it are P2P.
All you need to start trading on Logium is to connect your MetaMask wallet, pick your token and place your bet, or take the already existing one. There's also a virtual account you may use to learn about the markets and improve your trading skills without risking real money.
- Simple and intuitive interface
- No KYC
- Up to 5x leverage
- Asset prices are derived from Uniswap, so there’s no risk of oracle failure
- The Beta version may be unstable
- Only SHIB, wBTC, wETH, APE, and HEX are supported in the current release
Delta is a Singapore-based centralized crypto derivatives platform founded in 2018 and backed by Kyber Network, AAVE, Sino Global Capital, and CoinFund. Besides options, it also offers a wide range of trading products, such as futures with 100x leverage on BTC and 50+ altcoins, MOVE contracts and spot market. The options segments allow placing bets on BTC, ETH, XRP, LTC, BCH, BNB, and LINK.
- Complex yet intuitive interface
- Many cryptocurrencies available for options trading
- Transparent and respected team
- Insurance fund
- Mandatory KYC for new customers since May 2022
Although crypto options trading is still a niche, many cryptocurrency exchanges have already started expanding their options offerings as more and more retail and institutional investors are becoming interested in these derivatives. Many market participants are looking for reliable trading platforms where they can access such instruments without worrying about their funds’ safety. We hope our article will help you make the right choice and start your crypto options journey.
And in case you want to learn more about investing in cryptocurrencies, we encourage you to check our article about crypto trading strategies for beginners and a list of bonuses and referral programs crypto exchanges offer to new customers.