There are two styles of crypto options:

• American: Where a buyer can exercise the contract at any time before the expiry date
• European: Where a buyer can only exercise the contract at the moment of expiry

The current price of the underlying asset plays an important role in how much an option’s premium costs.

• In the money (ITM): For a call, that’s when the strike price is lower than the current price of the underlying asset. For a put, it’s when the strike is higher than the current price.
• At the money (ATM: For both a call and a put, it’s when the strike is equal to the current price.
• Out of the money (OTM): For a call, it’s when the strike price is higher than the current price of the underlying asset. For a put, it’s when the strike is lower than the current price.

1. Understanding Options:
   • Call Options: Give the holder the right (but not the obligation) to buy an asset at a specified price (strike price) before or at the expiration date.
   • Put Options: Give the holder the right (but not the obligation) to sell an asset at a specified price (strike price) before or at the expiration date.
2. Basic Terms:
   • Strike Price: The price at which the option holder can buy or sell the underlying asset.
   • Expiration Date: The date when the option contract expires.
   • Premium: The price paid by the option buyer to the seller.
3. Types of Options:
   • Vanilla Options: Standard call and put options.
   • Exotic Options: More complex options with specific features, such as binary options or barrier options.
4. Crypto Exchanges Offering Options:
   • Many cryptocurrency exchanges offer options trading, including Binance, Deribit, FTX, and others.
5. Risk Factors:
   • Options trading involves risks, including the potential loss of the entire premium paid.
   • High volatility in the crypto market can impact option prices significantly.
6. Greeks:
   • Understand the Greeks (Delta, Gamma, Theta, Vega, Rho) and how they impact option pricing. These metrics help assess an option's sensitivity to various factors.
7. Strategy Considerations:
   • Covered Calls: Selling calls against an existing long position.
   • Protective Puts: Buying puts to protect against a decline in the value of a long position.
   • Straddles and Strangles: Strategies involving buying both a call and a put.

Greeks

• Delta: Measures the rate of change of the option's price in relation to the underlying asset's price.
• Gamma: Measures the rate of change of the option's delta in relation to the underlying asset's price.
• Theta: Represents the time decay of the option's value as time passes.