Under-Collateralized European Style Options
Note: Our under-collateralized, cash settled, European Style Options Protocol is still under active development.
The European platform allows traders to write options without having to put the entire underlying asset up as collateral.
For example, you might write a call for 1 BTC, but only need to deposit .15 BTC initially. This enables traders to make the most of their capital, particularly in allowing traders to hedge or speculate without tying up all of their assets.
Efficiency doesn’t come without risk: if a position moves against the trader’s expectation, and they are unable to put up the required collateral to maintain it, that position may be liquidated. Keep an eye on your positions, and make sure your portfolio is able to meet its collateral requirements!
European options expire automatically. Once the expiration date expires, traders can settle their position at the expired price, there is no need to remember to exercise if a trader intends to hold the option until expiration.
To provide our more experienced traders with even greater capital efficiency, the European platform allows traders to create some basic strategies, such as call spreads. Strategies allow multiple positions on the same asset to be treated as a single unit for purposes of computing collateral, which generally results in much lower collateral requirements compared to maintaining the same positions if they were treated individually. Strategies are a great way to hedge risk, profit from predicted market moves, cap losses, and protect positions from market volatility.