Bitcoin Futures and Bitcoin Options: Bitcoin Financial Contracts, What's the Difference?

Bittime - Cryptocurrencies have become a highly discussed topic in recent years. One of the most popular cryptocurrencies is Bitcoin. However, apart from buying and holding Bitcoin directly, there are also other financial instruments that can be utilized to profit from Bitcoin price fluctuations.

The two instruments are Bitcoin futures and Bitcoin options. So, what are Bitcoin future and Bitcoin options, the differences and benefits of both? Read this article to the end to find out.

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Bitcoin Futures

Bitcoin futures are financial contracts that allow investors to buy or sell Bitcoin at a specific date in the future at a price determined at the time the contract is created. 

These contracts are generally traded on futures exchanges and can be used as a tool for speculation or hedging against the risk of Bitcoin price fluctuations.

Bitcoin Options

Bitcoin options are financial contracts that give the contract holder the right (not the obligation) to buy or sell Bitcoin at a specified price (deal price or strike price) at a certain date in the future. 

Options contract holders must pay a premium to obtain these rights. There are two main types of Bitcoin options. First, call options which give the right to buy Bitcoin. Second, put options which give the right to sell Bitcoin.

Also Read: What is a Crypto Exchange and Why is it Important?

Differences between Bitcoin Futures and Bitcoin Options

1. Rights and Obligations

In Bitcoin futures, both parties (buyer and seller) have an obligation to buy or sell Bitcoin on the expiration date. Meanwhile, in Bitcoin options, only the contract holder has the right to execute the contract. The options seller has an obligation to fulfill the request if the contract holder decides to exercise the contract.

2. Flexibility

Bitcoin options provide greater flexibility to investors because they only have the right, not the obligation to buy or sell Bitcoin. They can choose to execute the contract only if it is profitable.

3. Risks and Returns

Bitcoin futures tend to have higher risks because both parties have an obligation to carry out the contract, while Bitcoin options allow investors to limit risk by paying a fixed premium and have unlimited potential returns.

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Benefits of Bitcoin Futures and Bitcoin Options

1. Speculation

Both Bitcoin futures and Bitcoin options can be used by investors to speculate on the direction of Bitcoin price movements in the future. They can choose a long position (buy) if they are bullish on Bitcoin or a short position (sell) if they are bearish.

2. Hedging

Investors who have exposure to Bitcoin can use Bitcoin futures and options as a hedging tool to protect their portfolios from the risk of Bitcoin price fluctuations.

3. Access to Leverage

Bitcoin futures and options allow investors to gain access to leverage, allowing them to control larger amounts of Bitcoin than they would with less capital.

Conclusion

From the explanation above, it can be seen that Bitcoin futures and Bitcoin options are two financial instruments that investors can use to profit from Bitcoin price fluctuations. 

Although both have differences in rights and obligations and levels of flexibility, both can be used as speculative or hedging tools depending on each investor's investment goals and strategies. 

By understanding the concepts, differences and benefits of these two instruments, cryptocurrency market players can make smarter and more effective decisions in the dynamic cryptocurrency market movements.

Also Read: What is Cryptography?

How to Buy Bitcoin (BTC) with Bittime

If you are interested in buying and investing in the Bitcoin crypto asset, you can buy it at Bittime. BTC tokens are available on Bittime in BTC IDR pairings. 

The following is a guide on how to buy BTC tokens on Bittime. 

1. Register an account at Bittime using an active email. 
2. Complete the identity verification process.  
3. Once the account is verified, open the Bittime application.
4. Select the Market menu or click the graphic icon. 
5. Select IDR pairing to buy BTC with Rupiah.
6. Click 'Buy'.
7. Select the order type to use. Limit orders, market orders and stop orders are available.
8. Enter the nominal rupiah to buy BTC.
9. Click the 'Buy BTC' button. 
10. A notification pop up will appear. Read it carefully and click 'Confirm'. 
11. Enter the six digit Transaction PIN.
12. The application will display a successful order notification. 
13. Check your BTC balance in your e-wallet after successful transaction.

To see a complete guide on how to buy Bitcoin (BTC), you can click here .

Monitor price chart movements of Bitcoin (BTC), Ethereum (ETH), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.

Crypto asset buying and selling transactions on Bittime are easy, safe and instant. Bittime is officially registered and supervised by Bappebti and Kominfo. 

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What is Bitcoin and How Does It Work?

DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.