Introduction to DeFi Options Trading

In this uncertain cryptocurrency market, when investors have strong opinions about market direction, options trading has become a popular choice. This article will introduce you to the basics of options trading and recommend several on-chain options protocols worth paying attention to.

Options Trading Basics

Options are a type of financial derivative that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on a specific date. Options are mainly divided into two categories:

• Call Options (: Gives the buyer the right to purchase the asset at a predetermined price.
• Puts ): Gives the buyer the right to sell an asset at a predetermined price.

The key elements of options trading include:

• Strike Price: The agreed price for buying and selling the underlying asset
• Expiration Date: The validity period of the Options contract
• Options Fee: The cost of purchasing options

Options trading has the characteristics of limited loss and unlimited profit potential, making it suitable for various types of investors. However, it is very important to understand the basic principles of options pricing models like the Black-Scholes model ( before trading.

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Five Major On-Chain Options Protocols

) 1. Lyra

• Supported Chains: Arbitrum, Optimism, Ethereum
• Trading pairs: ETH, BTC

Lyra offers a streamlined user interface, a variety of strike prices and expiration date options, as well as lower bid-ask spreads. Currently, the total locked value on Optimism and Arbitrum exceeds $29 million. It is suitable for experienced traders looking for a traditional brokerage experience.

2. Hegic

• Supported chains: Arbitrum, Ethereum
• Trading Targets: ETH, BTC

Hegic's features include customizable expiration dates and one-click complex strategies. Users can select various bullish, bearish, or volatility strategies based on their own risk preferences and market views. It is suitable for users seeking flexible trading and complex strategies.

3. Whiteheart

• Supported Chain: Ethereum
• Trading targets: ETH, BTC

Whiteheart offers extremely simple hedge contracts, where users only need to select the underlying asset and the hedging days to lock in the current price. It is suitable for novice users who wish to avoid downside risk in a straightforward manner.

4. Premia

• Supported chains: Ethereum, Arbitrum, Optimism, Fantom
• Trading assets: ETH, BTC, YFI, LINK and various other tokens

Premia supports options trading for various small-cap assets and offers customizable expiration dates. Its uniqueness lies in the options pricing dashboard, which helps users assess whether the option price is reasonable. It is suitable for users who wish to trade options on a variety of assets and gain a deeper understanding of pricing.

5. Siren

• Supported Chain: Polygon
• Trading assets: ETH, MATIC, SUSHI, YFI and various other tokens

Siren provides a trading interface similar to traditional Options chains on Polygon, supporting various assets and strike prices. Compared to Lyra, Siren offers a broader range of underlying assets and more over-the-counter Options choices. It is suitable for traders looking to gain a traditional brokerage experience on Polygon.

Overall, on-chain Options protocols provide cryptocurrency investors with flexible risk management and investment tools. When choosing the right protocol, it is important to consider your own trading experience, risk appetite, and trading needs for specific assets.

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