Today I am going to talk about Binance option trading. In the beginning, I like you to know that it is not options trading at all because here you don’t have any right you don’t have things like stop loss, target and the like things.
Just like betting, in Binance option trading either you lose your entire paid premium or you earn some money after the breakeven.
In between, you don’t have anything like we do option trading in stock market.
Also, for your information, if you will close your trade before the breakeven point you will lose entire premium.
Let’s first understand what happens in stock market options trading.
Suppose, I bought a call option at $20 and the price is going up. Then, it is obvious that the option price will also go up and I can exit at any point to book profit. For example, as I have paid call option price $20 and if it reaches to $25, I can book profit by exiting from the trade.
In that case, my profit would be current option price minus what premium I have paid. As per above example, my profit would be:
$25 (current option price) – $20 (Entry price) = $5
It was simple options trading. Now lets see what happens in Binance options trading?
In Binance option trading, it is totally different. Let’s say you have paid a call option price $20 at any strike price (also let me tell you here you don’t have any strike prices Binance automatically chooses at the money strike price). So at the money call option price you have paid is $20. Now let’s assume, price goes up and option price that you have bought is $25 now.
Unlike normal stock options trading, in Binance you will not see $25 in your P&L, instead you will see -$15.
Clarification: I am talking about their mobile options trading platform.
Click on the following link to open Binance account and get 5% cashback on your trading fee:
Binance Options Trading
Binance options trading P&L goes like that. For example if option price is increased by $5 then it would be deducted from your paid premium. In that way to start seeing profit first you would need to earn $20 extra which mean when option price will reach to $40 you will be at breakeven.
And after the breakeven you will start seeing some profit which I found is next to impossible in most the trades.
Let’s say your option price expires before the break even then you will lose your entire premium paid.
Actually, I was going to make a video on Binance option trading. And before that I was testing their option trading platform. I considered option Binance option trading as simple stock option trading.
But it is totally different. In stock option trading, we can exit any time and book profit even before the break-even point, we can book profit.
But here in Binance option trading, you cannot book profit because till the break-even you will be in loss.
After the breakeven, your profit will start.
What I would like to say is Binance option trading is smartly designed like casinos. Like casinos, in the end of the day, they remain in profit. Similarly in Binance option trading, in the end of the day Binance will be in profit.
If you would like to know what I am talking about then you can try Binance options trading with very small amount.
What I would suggest you if you really would like to do crypto options trading then find some other place or refrain from Binance mobile app options trading.
They also have web based options trading platform which is totally different. In the upcoming days I will test that too and let you know about that too.
At pen off, I would suggest Binance that if they really would like to provide crypto options trading platform then make it like normal stock market options trading where we start earning profit right from the entry point.
If prices goes up we earn and can exit at any point at current option price and our profit loss should be exit price – entry price.
I would like to mention that the cryptocurrency exchange is one of the best in the world and in coming months I assume they will make significant changes.