Binance, the top cryptocurrency exchange by trading volume, has now enabled users to earn a passive-like income through ether options, a strategy previously reserved for professionals.
The exchange revealed in a press release shared with CoinDesk that users can write (sell) ether options, allowing them to manage risk effectively while generating additional income. This move comes in response to the growing demand from both retail and institutional investors for advanced derivative trading tools.
This announcement builds on Binance’s efforts to democratize bitcoin options writing and reflects the significant demand for BTC, ETH, and ETF-based instruments.
There is a clear institutional interest in these products; earlier this year, BlackRock’s IBIT options surpassed Deribit’s native BTC options in volume, marking a significant shift in the crypto derivatives space.
“Binance is dedicated to providing innovative tools that cater to the changing needs of our users,” stated Jeff Li, VP of Product at Binance. “The launch of ETH Options writing and enhancements to our Options platform will equip traders with faster execution, increased flexibility, and enhanced market data to support more sophisticated trading strategies in the burgeoning crypto derivatives market.”
Options are derivative contracts granting the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specified timeframe. These contracts settle at a future date, dependent on whether the asset’s price exceeds or falls below a particular threshold.
While the call buyer benefits from price increases, the seller (writer) takes the contrary position, effectively providing insurance against bullish movements in exchange for an upfront premium, which acts as immediate income.
Experienced traders have increasingly employed this strategy over the past few years, writing calls or puts on Deribit, often hedged against their coin holdings to earn income.
With the new feature, Binance users can do the same with ether options, utilizing margin to secure their obligations, with access subject to a required suitability assessment for responsible trading.
To encourage immediate liquidity, Binance is also introducing a 20% discount on both Taker and Maker fees for VIP users across its newly listed ETH, BTC, BNB, and SOL contracts, reinforcing its leadership in the competitive crypto options landscape.
Platform upgrade
In an effort to capture a larger portion of the derivatives market, Binance has revamped its options platform, incorporating a range of infrastructure enhancements tailored for high-frequency traders and institutional clients.
The updated ecosystem features significantly higher API throughput and reduced latency, facilitating quicker order execution during times of high market volatility. Additionally, the exchange has expanded its array of strike prices across various assets, giving traders the precision needed for intricate hedging and speculative strategies.
To enhance market transparency, the platform now includes advanced WebSocket streams, providing deep market data crucial for sophisticated technical analysis.
