Earnings on bitcoin options. Is Bitcoin legal in India? What is tax rate on Bitcoin profits?
How to make money Trading bitcoin Volatility!!
This applies to both put and call options — which means that you can take a long or short position with either type of option. But when you write an option, you are selling your right to decide to the buyer — if the options contract earnings on bitcoin options exercised by the holder, you would have to uphold your end of the contract. For taking on the risk of doing so, you would receive a premium.
Bitcoin call options Buying a bitcoin call option gives you the right, but not the obligation, to purchase a specific amount of bitcoin at a set price the strike price at or before the expiration date. If your prediction was incorrect, and the price of bitcoin declined instead, you could let the options contract expire worthless, and only lose the premium you paid to open the trade.
You would do so if you believed the underlying market price would fall or see little volatility. Bitcoin put options Buying a bitcoin put option gives you the right, but not the obligation, to sell a specific amount of bitcoin at a set price, at or before the expiration date.
If your prediction was correct, and the bitcoin price declined below your chosen strike price, you could sell your bitcoin holding at higher price than the new market value. For speculative traders, there are a range of options strategies that can be used to take advantage of options volatility.
For example, a straddle options strategy platinum options simultaneously buying and selling an equal number of bitcoin puts and calls with the same strike price and the same expiration date.
The idea is that the profit to one position would offset the loss to the other, ensuring you have a net profit — this means you could take advantage of bitcoin volatility, regardless of which way the market moves. The most common options strategy for hedging an existing holding is a covered call — this involves writing a call option for the same number of BTC that you already own.
If the market price declined, the short call option would offset some of the losses to your BTC holding.