OKEx Adds Ether Options to Help Crypto Traders Exploit Market Volatility
Nicholas Otieno Jun 07, 2020 04:00
Cryptocurrency exchange OKEx announced that it is adding two new services to its platform. The Malta-based exchange launched its ETH (Ether) options contracts on June 4. The exchange also announced that it will launch the EOS/USD options on June 18. The company also stated that they have placed 1000 Ether in the Ether options insurance funds to prevent any possible clawback. The exchange is one of the largest cryptocurrency trading and derivative platforms.
Cryptocurrency exchange OKEx announced that it is adding two new services to its platform. The Malta-based exchange launched its Ether (ETH) options contracts on June 4. The exchange also announced that it will launch the EOS/USD options on June 18.
The company also stated that they have placed 1000 Ether in the Ether options insurance funds to prevent any possible clawback. The exchange is one of the largest cryptocurrency trading and derivative platforms.
Options act as a trading risk hedge
OKEx is giving crypto users more options to wager on the movement of digital assets. The two additions to the crypto exchange will allow traders to either sell or buy the underlying assets to hedge risks and maximize profits.
OKEx has managed to make a name for itself and cultivate its position in the derivatives market, offering various derivatives products like crypto futures and perpetual swaps for Bitcoin (BTC) and ETH. The crypto exchange has positioned itself as the Bitcoin futures exchange since March. The company said that such derivatives products play an irreplaceable role in maximizing profits and hedging risks.
For example, the firm explained that when the price of Ether goes down, spot traders can choose to close or hold their positions to cut losses. With Ether options, traders can choose to purchase put options and profit from declining prices to offset their losses in the spot market while holding Ether for potential future gains.
The company said that the marked prices for the contracts are determined by OKEx’s Black-Scholes model that works on real-time market data analysis. But the final settlement prices are determined by a time-weighted average of what the asset price is over a certain period of time that will occur before the contract expires.
Open contracts allow traders to sell and buy depending on the type of contract and the underlying asset, be it Ethereum or Bitcoin helps traders to hedge against risks. Investors’ interest in the cryptocurrency derivatives market has risen during this year, with open interest in Ether futures listed in major exchanges increasing by 100%.
Before the company launched the ETH/USD options, it has already introduced BTC/USD options, which have demonstrated to be a hit among crypto traders. Skew released recent data that indicates that OKEx’s BTC/USD options generated an average daily transaction volume of more than $10 million.
Derivatives products assist in hedging risks during difficult times and maximizing profits. Among several derivatives products, futures and options are the most popular ones.
OKEx is currently the largest Ether futures exchange by open interest, constituting 26% ($179 million) of the global tally of $672 million. Furthermore, recently the exchange has surpassed BitMEX to become the largest Bitcoin futures market share.
Although OKEx dominates the future products, Deribit crypto exchange dominates the options segment. However, OKEx has a lot to cover before threatening Deribit’s number one position in the options market.
OKEx makes entry into Africa
OKB is a global digital coin (token) adopted by OKEx. The boom of blockchain technology has led to the emergence of a new financial system identified as decentralized finance (DeFi). It is known that DeFi benefits people with low-cost financial services with higher reliability and efficiency.
OKEx continues working together with various partners to let OKB users access various DeFi services. In September 2019, OKEx announced its plans to enter its presence in Africa’s market. The exchange targets Africa because the continent has seen a rising mass adoption of cryptocurrencies and blockchain-related activities.
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