Get started with options

This guide takes about five minutes. Tell us how much you already know, and it will skip the steps you don't need. You can come back to any topic later in the knowledge base. Nothing here is investment advice: BOSS shows prices and explains them, it doesn't tell you what to trade.

An option is a contract that gives you a right, but not an obligation. You pay a small amount today, the premium. In return you lock in a price, the strike, for a set date, the expiry.

There are two kinds, and each has an everyday cousin:

• A call is like a down payment on a house or a car you may buy later. You pay a little now to lock in the price. If the price goes up, you use your right and gain the difference. If it doesn't, you walk away and lose only the down payment.
• A put is like insurance. You pay the premium so that, if the price falls below the strike, you are paid the difference. If it doesn't fall, the premium is gone, like insurance you never claimed.

The analogies have limits. The "insurer" is not a company: it is whoever sold you the option in the market. And nothing is handed over at the end. The crypto options on Deribit, OKX and Bybit settle in cash: nobody delivers bitcoin, only the difference is paid. They can only be used at expiry, not before.

More in What is an option?

Every option has two sides, a buyer and a seller.

• The buyer pays the premium and gets the right. The most they can lose is what they paid.
• The seller receives the premium and takes on the duty to pay. The most they can gain is the premium. Their loss can be much larger, and has no limit on a call sold without protection.

In the insurance picture, the seller is the insurer: they collect the premium and pay out when things go wrong for the buyer.

That gives four basic positions: buy a call, sell a call, buy a put, sell a put. Every strategy on this site is a mix of them. If a strategy pays more premium than it receives, it costs you money to open: a debit. If it receives more than it pays, you are paid to open it: a credit. A credit is not free money, it is payment for taking a risk.

More in Calls and puts.

Four numbers explain most of what happens to an option's price:

• Premium: what the option costs right now.
• Implied volatility (IV): how big a move the market expects, as a yearly percentage. Higher IV means more expensive options, for calls and puts alike. See implied volatility.
• Delta: how much the option's price changes when BTC moves $1. A call's delta is positive (it gains when BTC rises); a put's is negative (it gains when BTC falls). A call at the current price has a delta near 0.5. See delta.
• Theta: how much the option's value changes each day just because time passes. For a buyer theta is negative (the value lost each day), so time works against them; for the seller it works in their favour. See theta.

Every strategy page shows these numbers for the whole strategy, live.

One more word you will see everywhere: the forward, the price agreed today for BTC on the option's expiry date, set by the futures market and usually a little above today's price; options are priced against it (see forward price and basis).

Every strategy starts from an opinion about the market. Do you think the price will go up, go down, stay in a range, or move a lot in either direction? Pick the one closest to yours. BOSS suggests a few strategies that fit, starting with the simpler ones whose maximum loss is limited.

Every strategy page on BOSS has the same blocks, built from live prices:

• Payoff chart: your profit or loss at expiry for every possible price of BTC, with today's price marked.
• Legs and assembly cost: each option the strategy uses. You see its mid price (halfway between the best offer to buy and to sell) and what trading it would really cost now: buying at the ask, selling at the bid, plus the exchange's fees.
• Result: the maximum profit, the maximum loss, the breakeven (the price where you neither gain nor lose) and an estimated chance of profit.
• Greeks: delta, gamma, vega, theta and rho for the whole strategy, and how they change as the price moves.
• Compare venues: the same strategy priced on Deribit, OKX and Bybit, side by side.

A small "?" next to a label opens the article that explains it.

• Paper trading: open any strategy as a pretend position, priced live, with no real money. The best place to practise.
• Scanner: every strategy across every exchange and expiry, filtered and ranked.
• Dashboard: implied volatility, the smile, the term structure and the forwards of each exchange.
• Knowledge base: every idea the site uses, explained with examples.
• Find By: browse all 58 strategies by level, direction, volatility and risk.

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