Can You Buy Bitcoin Options? Heck Yes You Can With Robinhood!
Can you buy Bitcoin Options? Yes, you can trade options with Bitcoin and other alt coins. In fact, many people believe that trading options with Bitcoin and other alt coins is a great way to make money. I would say it CAN be a good way to make money in certain instances, however it is probably not the best long term strategy. If you were to tell your financial advisor that you wanted to trade Crypto Currency, let alone buy options on Crypto, he would look at you somewhat similarly to how a golden retriever looks at a mouse, with confusion and awe at how likely bad of a decision that was.
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What Is a Call Option And a Put Option?
Options are contracts that give the owner the right to buy or sell an asset at a certain price within a certain period of time. For example, you purchase a Call Option which gives you the right to buy a security at a certain price given a certain expiration date timeline.
Buying Call Options on Crypto Via Robinhood?
With Bitcoin and other alt coins, options can be used to speculate on the price movement of the underlying asset. For example, if you believe that the price of Bitcoin is going to increase in value, you could purchase a Call Option. If the price of Bitcoin does increase, you will make a profit. However, if the price of Bitcoin falls, you may be best served by purchasing a Put Option on the crypto currency, this way you are buying a contract that gives you the right to sell, and that you can buy on the open market when it drops, putting the option on someone else in order to drastically profit.
Why Use An Option?
Options can be used to speculate on the price movement of the underlying asset. For example, if you believe that the price of Bitcoin is going to increase in value, you could purchase a Call Option. If the price of Bitcoin does increase, you will make a profit. However, if the price of Bitcoin falls, you may be best served in a CD in comparison to these sometimes garbage option contracts.
Can You Use An Option Contract To Hedge Your Position?
You can also use options to hedge your portfolio against potential losses. For example, if you are holding a large amount of Bitcoin and are worried about a price drop, you could purchase a Put Option. This would give you the right to sell your Bitcoin at a set price, no matter how low the market value falls. As a final note to doing this, steer clear of Bitcoin options and opt for some index funds, it may be the best way to success.
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