So, it works in the seller’s favor for the contract to expire without the option to buy being taken, as they would collect the premium without selling the asset. If Bitcoin drops to $70,000: You let the option expire, losing only your $500 premium since you’re not obligated to buy. Imagine you buy a call option on Bitcoin with a strike price of $72,500, paying a $500 premium for the right to buy it within the month. If Bitcoin goes up to $75,000: You exercise the option and buy Bitcoin at $72,500, netting a $2,000 profit after subtracting the $500 premium.

Дмитрий Щукин Crypto Trading

During a futures contract, long and short traders can close their positions. If it sounds like there’s always a winner and a loser, then you’re right. The difference in the contract price and the market price of the asset at expiration locks in either profit or loss for each side of the trade. For a short trade, you would buy back the underlying asset. For a long trade, you would sell the futures contract onward. Future trading is a zero-sum product. Suppose Bitcoin is currently priced at $72,000.

If Bitcoin stays at $72,500: You break even on the strike price, but you still lose the $500 premium paid. They are never-ending or “perpetual”. Also referred to as perps or perpetual swaps. Similar to futures, it is a zero-sum trade, either profitable or unprofitable. Once again, they enable people to bet on the future price of assets. Crypto perpetual contracts are very similar to normal futures contracts, except they have no expiry date.

By the end, you’ll have a clear understanding of futures, options and perpetuals in crypto and how they work. The contracts either oblige or offer the option to trade an asset at a predetermined price on a specific date. Two parties agree to trade one Bitcoin (BTC) for $70,000 on Nov. 30, 2024. On this expiry date, the buyer must buy, and the seller must sell at this price. Derivatives are a financial contract between two traders: one buyer and one seller. It doesn’t matter what the price of Bitcoin is trading for on the spot market. The difference between the contract price and the actual price is where the profit and loss is made.