Popular cryptocurrency exchange OKEx has launched a new options trading program for customers interested in digital currencies.
OKEx Teaches How to Take Advantages of Price Swings
The program is designed to help investors better understand issues such as hedge risks and volatility. They will also be trained on how best to take advantage of low prices so that they can add to their portfolios without delay.
Volatility is a serious problem in the cryptocurrency space, but representatives of OKEx suggest that if one is familiar with how price swings work, it can be used to a trader’s benefit.
Volatility is widely blamed for why many mainstream forms of cryptocurrency (i.e. Bitcoin, Ethereum, etc.) are not used as means of payment. In the beginning, virtually every cryptocurrency was designed to serve as a way for underbanked citizens to pay for the goods and services they would need to survive.
Sadly, this hasn’t always worked as many companies refuse to accept an asset that could lose half its value or more overnight. Let’s say you walk into a store and buy $50 worth of merchandise using bitcoin. Tomorrow, bitcoin goes down, which means you’ll still walk away with all your items, but the store has lost $20 in profit.
This doesn’t work for merchants, which means it’s a big deal when large companies such as Overstock announce that they will begin accepting crypto from customers to purchase items.
Bitcoin itself is going through a heavy period of volatility at press time considering it recently fell below the $7,000 mark. The currency has been struggling since late September, and while there have been a few jumps here and there, BTC has not managed to recuperate all the way. It is now nearly $3,000 less than where it stood when Bakkt made its official debut.
Enzo Villani – head of international strategy and innovation at OKEx – says that while institutional investors have become more intrigued by cryptocurrency over the years, they are consistently looking for ways to hedge against volatility. The exchange, he says, and its new “buy-write” options will allow people to “participate in the market at different levels.”
We are really focused on security and risk management… Pricing is based on the Black-Scholes model and [the] entire market – not just one bitcoin quote from one exchange.
Things Are Just Getting Started
He further states that while the product is still in its early launch stages, he’s confident it will adapt over time to meet the changes in investors’ demands. He explains:
We’re still in the early days. Adding the options market allows people to trade something that they’re used to… This is the part of the adoption – basically moving into a market price mechanism to reflect fair market prices of the underlying assets, lowering the risks of market manipulation and margin loss against abnormal volatilities.