How do crypto options work?

A crypto option is a contract giving the buyer the right, but not the obligation, to buy or sell a coin such as bitcoin at a set price before a set date. The buyer pays a fee upfront for the right, called the premium. The premium is the most the buyer can lose. For example, a call with a $100 strike price and a $10 premium pays $20 at $120 at expiry, a $10 profit, and pays nothing below $100.

Updated 2026-10-15

What are the parts of a crypto option?

A crypto option has four parts: the coin, the strike price, the expiration date and the premium. First, the coin is the asset the option is written on, for example bitcoin or ether. Second, the strike price is the fixed price at which the option can be exercised; according to Binance Academy, the strike price “doesn’t change over the life of the contract, even if the market price moves significantly.” Third, the expiration date is the deadline, and once the deadline passes the contract is worthless. Fourth, the premium is the price of the option, paid upfront by the buyer to the seller. A call option is the right to buy the coin at the strike price; a put option is the right to sell the coin at the strike price. With a $100 strike price and a $10 premium, a call option starts to make money above $110, and a payout of $20 at $120 is 2 times the premium.

What happens when a crypto option expires?

At expiration, a crypto option is either in the money or out of the money, and the two outcomes are very different. First, an option is in the money when the market price is past the strike price: above the strike for a call, below the strike for a put. According to Binance Academy, Binance options are European-style and cash-settled, and an in-the-money option is exercised automatically at expiration, with the profit paid in cash rather than in the coin. Second, an out-of-the-money option is not exercised at all; according to Wikipedia’s entry on option expiration, “out of the money options are not exercised automatically,” and the option simply expires worthless. Third, the premium is spent in both cases. For example, with a $100 strike and a $10 premium, a coin at $130 at expiry pays $30, a $20 profit, while a coin at $95 pays nothing and the $10 premium is gone.

How do options work on Supervega?

Supervega is a crypto options app on Starknet turning the four parts of an option into three choices. 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.