Binance Options Service Agreement
Last updated: 18th July 2024
This Binance Options Service Agreement (this “Agreement”) shall apply to all Options (as defined below) traded on the Platform.
All capitalized terms and references used in this Agreement that are not defined herein shall have the meaning given to them in the Binance Terms of Use (the “Terms of Use”). Where a term is defined both in the Terms of Use and in this Agreement, for the purposes of this Agreement only, the definition in this Agreement shall prevail.
This Agreement shall be supplemental to and is to be read together with the Terms of Use. Accordingly, the provisions set out in the Terms of Use shall apply to the use of the Platform for the purposes of transacting in Options, where applicable, and references in the Terms of Use to “Binance Services” and/or “Transactions” shall be deemed to include references to Options, Options Contracts, and the related services contemplated hereunder, where relevant and as the context requires. This Agreement constitutes “Product Terms” for the purposes of the Terms of Use. In the event of any conflict or inconsistency between this Agreement and the Terms of Use, this Agreement shall prevail with respect to the services contemplated hereunder unless expressly stated otherwise.
The terms in this Agreement shall be further supplemented by the Option Specifications. In the event of any conflict or inconsistency between the terms in this Agreement and the Option Specifications, the Option Specifications shall prevail with respect to the services contemplated hereunder unless expressly stated otherwise.
This version of this Agreement shall replace and supersede any previous agreements between us with respect to Options and any previous versions of this Agreement that may have been accepted through, or otherwise made available on, the Platform. By transacting in Options through the Platform, you confirm your acceptance of this Agreement, the Terms of Use and the Option Specifications.
1. Definitions and Interpretation
“Account” means an account maintained or to be maintained by Binance for you for the purpose of transacting Options through the Platform. The “Account” shall be called a “Binance Account” for the purposes of the Terms of Use.
“Call Contract” means a contract entitling the Option Buyer, upon Exercise, to notionally purchase the Crypto Asset Amount from the Option Writer at the applicable Strike Price and to receive from the Option Writer, in lieu of the Crypto Asset Amount, the Settlement Amount.
“Commencement” means the time at which the Option Contract is entered into on the Platform.
“Crypto Asset Amount” means the amount of the Underlying Asset that is to be notionally bought or sold pursuant to an Option Contract.
“Eligible Crypto Asset” means any Crypto Asset that Binance has confirmed it will accept for the purposes of Premium payments with respect to Option Contracts.
“Exercise” means the exercise of the rights of the Option Buyer granted pursuant to an Option Contract, as applicable. Exercise will be automatic on Expiry of the Option if the Option is In-the-Money.
“Exercise Fee” has the meaning given to it in clause 5.1 of this Agreement.
“Exercise Period” means the period from Commencement to Expiry.
“Expiry” means the expiration time chosen or specified on the Platform when entering into the relevant Option Contract.
“In-the-Money” means the Settlement Amount with respect to an Option Contract is a positive amount in favor of the Option Buyer at the time of Expiry of the Option Contract.
“Options” mean european-style options available for purchase or sale on the Platform that are quoted and settled in certain stablecoins and are automatically Exercised on Expiry if the Option is In-the-Money (and may not be Exercised prior to Expiry).
“Option Buyer” means the party that pays the Premium to the Option Writer or Option Seller, as applicable, and is entitled to receive from the Option Writer, upon Exercise, the Settlement Amount.
“Option Contract” means a Call Contract or a Put Contract in respect of any Option.
“Order” means any offer to enter into an Option Contract, or any instruction, request, application or order in relation to an Option Contract in whatever form and howsoever sent, given or transmitted by you or on your behalf to Binance, or which Binance reasonably believes to have been sent, given or transmitted by you or on your behalf, including any instruction, request or order to revoke, ignore or vary any previous offer, instruction, request application or order.
“Option Seller” means a party that sells an Option Contract to an Option Buyer, thereby closing its position in the relevant Option Contract and transferring to the Option Buyer the right to receive the Settlement Amount.
“Option Specifications” means the contract specifications with respect to each type of Option Contract available through the Platform, as accessible here.
“Option Writer” means, in respect of an Option Contract, the party that grants to the Option Buyer, upon Exercise, the right to receive the Settlement Amount.
“Premium” means an amount in USDT (or any other Eligible Crypto Asset) paid by the Option Buyer to the Option Writer or Option Seller, as applicable, to enter into an Option Contract, as specified on the Platform.
“Put Contract” means a contract entitling the Option Buyer, upon Exercise, notionally to sell the Crypto Asset Amount to the Option Writer at the applicable Strike Price and to receive from the Option Writer, in lieu of the Crypto Asset Amount, the Settlement Amount.
“Settlement Amount” means the greater of (i) zero, and (ii) the amount calculated on a formula basis as follows: (A) in the case of a Call Contract, the excess of the Settlement Price over the Strike Price, multiplied by the Crypto Asset Amount, and (B) in the case of a Put Contract, the excess of the Strike Price over the Settlement Price, multiplied by the Crypto Asset Amount.
“Settlement Price” means the arithmetic mean of the Spot Index Price in respect of the Underlying during the 30 minutes preceding the Exercise of the relevant Option Contract, as determined by Binance.
“Spot Index Price” means the volume-weighted average of the spot prices of the Underlying on the major spot market exchanges that Binance has determined shall constitute the “Price Index”. .
"Strike Price" means the predetermined price, agreed upon when entering into an Option Contract, at which the relevant Option Contract can be Exercised, as specified on the Platform.
“Time to Expiry” means the period of time until the Expiry of the Option.
“Transaction Fee” has the meaning given to it in clause 5.1 of this Agreement.
“Qualifying Users” means users of the global Binance.com platform whom Binance has agreed shall be permitted to provide liquidity in Options and to act as Option Writers in respect of Option Contracts, subject to the satisfaction of applicable margin requirements and other applicable eligibility requirements.
“Underlying” means the Crypto Asset that is the subject of the Option Contract.
2. Entry into Option Contracts
2.1 To enter into an Option Contract or close out an existing open position with respect to an Option Contract entered into through the Platform, you may place a relevant Order with Binance through the functionality available on the Platform. Binance is not obliged to accept, and does not guarantee the execution of, any Order.
2.2 Only Qualified Users may act as Option Writers. Currently, due to regulatory restrictions, clients of Binance Bahrain B.S.C. are not eligible to become Qualified Users.
2.3 When placing an Order to enter into an Option Contract through the Platform, you will need to select an Expiry. Options can only be Exercised at Expiry and will be automatically Exercised once Expiry is reached provided that the Option is In-the-Money. You may choose a daily, weekly, monthly, or quarterly Expiry. The different Expiries available are detailed on the Platform. Once an Expiry is chosen for a particular Option Contract, this cannot be changed.
2.4 On entering into an Option Contract as an Option Buyer, you will be required to pay the applicable Premium to the Option Writer or Option Seller, as applicable, which will be automatically deducted from your Account. It is your responsibility to ensure that you maintain sufficient Eligible Crypto Assets within your Account to cover any Premium due with respect to Option Contracts. If you do not have sufficient Eligible Crypto Assets within your Account to satisfy any Premium due, you will not be permitted to enter into any Option Contract.
2.5 If you place an Order to close out an existing open position with respect to an Option Contract and this Order is matched, the amount you will receive will reflect the current market price of your position (as determined by Binance). Once you have closed out a position in an Option Contract, you will no longer have any rights or obligations with respect to such an Option Contract (and you will not be entitled to receive, or required to pay, as applicable, any Settlement Amount on Expiry).
3. Exercise of Options
Options entered into through the Platform may only be Exercised at Expiry. If at Expiry an Option is In-the-Money, the Option shall be deemed to be automatically Exercised immediately upon Expiry. For the avoidance of doubt, if an Option is not In-the-Money at Expiry, the Option will lapse and will not be Exercised.
4. Settlement of Options
4.1 At Expiry of an Option, the Settlement Amount will be determined by the Platform. If the Settlement Amount is greater than zero, the Option will be automatically Exercised and the Settlement Amount will be automatically deducted from the Option Writer’s ’s Account and credited to the Option Buyer’s Account. The Settlement Amount will be paid in USDT (or such other Eligible Crypto Asset as determined by Binance).
4.2 The net profit for an Option Buyer with respect to each Option Contract will represent the Settlement Amount for the Option Contract, minus the Premium paid and any applicable fees. As an Option Buyer, the maximum loss with respect to an Option Contract will be limited to the amount of Premium paid, plus any fees.
4.3 Information as to Option Contracts entered into will be made available through the Platform (including, inter alia, information on the applicable symbol, underlying Crypto Asset, Premium, Strike Price, direction — i.e. Call Contract or Put Contract — Transaction Fee Rate). Binance will not actively notify you of any upcoming Expiry. You acknowledge and agree that it is your sole responsibility to monitor the Time to Expiry.
4.4 By entering into (or closing out positions in respect of) Option Contracts through the Platform, you authorize Binance to automatically: (i) deduct from your Account any amounts owed by you with respect to such Option Contracts, and/or (ii) credit to your Account any amount owed to you with respect to such Option Contracts.
5. Fees
5.1 Binance charges fees for opening and closing positions in Options (“Transaction Fees”) and also for the Exercise of Options (“Exercise Fees”).
5.2 Transaction Fees are payable by each of the Option Buyer, Option Writer or Option Seller (as applicable) in respect of each Option Contract entered into through the Platform. Transaction Fees are payable upon entry into and closing out of an Option Contract and are determined by reference to the Spot Index Price at the time of entry into/closing out of the Option Contract and the applicable “Transaction Fee Rate,” which may vary depending on whether you are the maker or taker of an Order.
5.3 Exercise Fees are payable upon Exercise of an Option by both the Option Buyer and the Option Writer. The Exercise Fee is determined by reference to the applicable Settlement Price and the applicable “Exercise Fee Rate.”
5.4. Transaction Fees and Exercise Fees are automatically deducted from the respective Account of each of the Option Seller or the Option Writer (as applicable), and the Option Buyer and are payable in USDT (or such other Eligible Crypto Asset as determined by Binance). Binance reserves the right to change applicable Transaction Fees and/or Exercise Fees (including the applicable Transaction Fee Rate and/or Exercise Fee Rate) from time to time, at its sole discretion and without prior notice. Further information on the calculation of Transaction Fees and Exercise Fees (including the applicable Transaction Fee Rates and Exercise Fee Rate) is set out on the Platform and can be accessed here.
6. Risks of Transacting in Options
6.1 You acknowledge that Options trading with respect to Crypto Assets is a highly speculative activity involving rapidly fluctuating markets. Before transacting in Options through the Platform, you should take steps to understand the nature of this product and the risks involved. By purchasing or selling Option Contracts on the Platform, you acknowledge and agree that you have sufficient investment knowledge, financial expertise, experience, and the capacity to take on the risks arising from such activity. You further agree to assume all the risks arising from conducting Options trading on your own account. If you are uncomfortable with associated levels of risks, you should not enter into Option Contracts.
6.2. Before entering into an Option Contract, you must ensure that you have sufficient Eligible Crypto Assets in your Account to satisfy any applicable Premium due. The Premium is a fixed value which will be deducted from your Account when you enter into an Option Contract as an Option Buyer. All Option Contracts will be purchased and Exercised on the basis of market prices, which may fluctuate from time to time. As such, there is no guarantee that prices displayed on the Platform will be current and will be the exact prices at which Option Contracts will be purchased and/or Exercised. Returns on Options trading will depend on market movements.
6.3 The net profit for an Option Buyer with respect to each Option Contract will represent the Settlement Amount for that Option minus the Premium and applicable fees. As an Option Buyer, the maximum loss will be limited to the amount of Premium paid and applicable fees.
6.6 Binance reserves the right to delist any Option available through the Platform and/or to discontinue providing any of the services referred to hereunder, in each case at any time in its sole and absolute discretion, without giving any reason or any notice to you thereof.
6.7 Binance reserves the right to alter, revise, modify, and/or amend this Agreement at any time at its discretion. Any such amendments will take effect immediately upon being published on the Platform. It is your responsibility to regularly check our website to confirm the latest version of this Agreement. Your continued access and use of the Platform for the purposes of trading in Options following any amendments to this Agreement shall indicate your acceptance of such amendments. If you do not agree to any such amendments, you should cease transacting in Options through the Platform.
7. Disputes, Governing Law, Jurisdiction and Arbitration
7.1 For the avoidance of doubt, clauses 31 to 35 (Complaints, Notice of claim, Agreement to arbitrate; Governing law; and Class action waiver) of the Terms of Use shall apply to any disputes or claims relating to, arising out of or in connection with this Agreement, including your entry into this Agreement.