Bitcoin options explained

A bitcoin option is a contract giving its buyer the right, but not the obligation, to buy or sell bitcoin at a fixed strike price by a fixed expiration date. The buyer pays a premium for the right, and the premium is the most the buyer can lose. A bitcoin call pays when bitcoin finishes above the strike price; a bitcoin put pays when bitcoin finishes below the strike price. For example, a $100,000 call pays $5,000 at $105,000.

Updated 2026-10-15

What does a bitcoin option pay at expiry?

A bitcoin option pays the gap between the bitcoin price and the strike price at expiry, and pays nothing when the gap runs the wrong way. First, for a bitcoin call option, the payoff at expiry is the excess, if any, of the bitcoin price over the strike price; according to Wikipedia’s entry on call options, the payoff is “the excess, if any, of the market value of the underlying instrument over the strike price.” Second, for a bitcoin put option, the payoff is the excess of the strike price over the bitcoin price, or zero. Third, the premium decides whether the payoff is a profit. For example, with a $100,000 strike price and a $4,000 premium, a call breaks even at $104,000: a bitcoin price of $110,000 at expiry pays $10,000, a profit of $6,000 after the premium, and a bitcoin price of $100,000 or below pays nothing, a loss of the whole $4,000 premium.

What decides the price of a bitcoin option?

The price of a bitcoin option, the premium, is made of two parts: intrinsic value and time value. First, intrinsic value is the gap between the bitcoin price and the strike price when the gap favors the option holder, and zero otherwise; for example, a $100,000 call holds $5,000 of intrinsic value at $105,000. Second, time value is the rest of the premium; according to Wikipedia’s entry on options, the time value “reflects the discounted expected value of that difference at expiration,” so time value grows with more time to expiration and more expected movement in the bitcoin price. Third, time value melts as expiration approaches. According to Binance Academy, theta measures the price decrease as expiration nears, and vega measures the sensitivity to volatility, so a bitcoin option bought in a calm market and held into a calm expiry loses value from both directions. A buyer pays for time and for expected movement, and gets both back only when bitcoin moves.

How do bitcoin options work on Supervega?

Supervega is a crypto options app on Starknet selling call options on bitcoin and the other assets Supervega lists, through three inputs instead of an options chain. First, pick an asset and set a target price: the target price plays the role of the strike price. Second, set a deadline: the deadline is the expiration date. Third, pay a small fee upfront: the fee is the premium, and the fee is the most a Supervega buyer can lose, with no liquidations and no margin calls. Supervega ranks the available options for the chosen target and deadline by multiplier, where the multiplier is how many times the fee the buyer receives if the price reaches the target; for example, a $10 fee with a multiplier of 5 pays $50, 5 times the fee. If the asset hits the target price before the deadline, the payout is sent to the wallet automatically, and above the break-even price a partial profit can be claimed early from the portfolio.