In brief
- A crypto derivatives exchange is now offering "turbo" options.
- The futures-like offering comes with up to 200x leverage.
- The offering follows the FCA ban on derivatives in the UK.
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Crypto derivatives platform Delta Exchange today launched Bitcoin turbo options, a twist on the traditional derivatives. These offer up to 200x leverage and enable traders to sell the option once a price barrier is hit.
“In the traditional markets, turbo options have become wildly successful because they provide traders with a way to capture the upside in underlying assets at fractional risk,” said Pankaj Balani, CEO of Delta Exchange. “By introducing these new exotic options to the crypto industry, we expect to drive increased open interest and participation in Bitcoin options trading.”
Options are essentially a type of futures contract that provides traders the opportunity—but not the obligation—to buy or sell an underlying asset at a predetermined price and on a pre-agreed date. Not unlike traditional bitcoin futures contracts, options are most often used as a hedging device, allowing traders to minimize risks while making a bet on the future price of an asset. Turbo options, meanwhile, turn the heat up on traditional options by appending additional leverage and offering a stop-loss to minimize drawdowns.
For Delta's turbo options offerings, the barrier price or stop loss is set at 0.5% below the spot price with a call feature allowing sellers to exercise their right to sell the option if the barrier price is hit. Additionally, these turbo options will initially be settled daily in Bitcoin, with weekly and monthly settlements in the pipeline.
“Turbo calls and puts are primarily retail driven products. They provide a way for retail traders to capture upside in the price of Bitcoin for a fraction of the price and without risking much capital," explained Balani. "However, we must note that these products are exotic derivatives products, and traders should make sure they understand the product and risks associated with them before trading in them,” he added.
Crypto derivatives have fallen into ill repute with regulators, particularly in the UK, where the financial conduct agency (FCA) has moved to ban them. Per the watchdog, derivative products are "ill-suited" for retail investors due primarily to the volatility of the underlying crypto market.