Know more about the BIT launches options trading for Cardano’s cryptocurrency ADA
On Wednesday, the cryptocurrency derivatives exchange BIT launched options based on Cardano’s ADA token and pledged to add alternative cryptocurrencies in the coming months.
In a press release provided to CoinDesk, BIT stated that the ADA options are currently available on the platform and are denominated and settled in US dollars. According to the exchange’s spokesperson, one ADA is represented by one option contract.
At the time of this writing, ADA, the native token of Ethereum rival Cardano, has a market value of US$9.73 billion and is the eighth-largest cryptocurrency globally. Unlike bitcoin (BTC) and ether (ETH), the market leaders, alternative cryptocurrencies typically exhibit greater volatility.
Options are a type of derivative contract that allows the buyer to buy or sell the underlying asset at a specified price on or before a specific date. A call option grants the right to purchase the asset, while a put option grants the right to sell.
With the availability of ADA options, traders can now use them to bet on an explosion in volatility or hedge portfolio risks, as with bitcoin and ether options.
With BIT’s unified margin system, traders can trade ADA options at a discount using their coin holdings as collateral.
“With a haircut ratio, users can use all of their assets in their accounts as trading collateral with BIT’s unified margin system. Users may now use their ADA as collateral and trade options at a 15% discount, according to the statement made by BIT in the announcement. The new service, launched with the help of strategic partner Darley Technologies and market maker DWF Labs, adds to BIT’s options. These options are tied to the decentralized layer 1 blockchain, The Open Network’s TON coin, and futures and options on Bitcoin and ether.
In the future, BIT said it would offer options to other altcoins, like meme coins.
