Key Takeaways
Binance Options RFQ offers different trading strategies to fit many kinds of market views and risk levels.
Strategies range from simple ones like single calls and puts to more complex ones like spreads, straddles, and strangles.
These strategies help you take advantage of price changes, reduce risk, and save on costs.
Whether you’re a big institutional trader or an experienced retail user, knowing these strategies can improve your options trading on Binance.
Introduction
Binance Options RFQ is a platform that lets you trade options easily and quickly, especially for big or complicated trades. Along with giving you access to good prices and big liquidity, it offers several trading strategies called multi-leg strategies.
These strategies let you make trades based on what you think will happen in the market and how much risk you want to take. In this article, we’ll explain eight popular trading strategies you can use on Binance Options RFQ.
1. Single Call
A Single Call gives you the right (but not the obligation) to buy an asset at a fixed price (strike price) by a certain date. If the market price goes above that fixed price, you can use the option to make a profit. If not, the option expires worthless and you lose what you paid for it.
When the option is in-the-money at expiry, it will automatically be exercised and you earn the difference between the market price and strike price, minus any premiums and fees paid. If the market price stays below the strike price (called out-of-the-money), the option expires and you lose the premium you paid for the contract.
When to use: You expect prices to go up before the contract expires.
2. Single Put
A Single Put works the opposite way. It gives you the right (but not the obligation) to sell an asset at a fixed price by a certain date. If the market price falls below that fixed price, you can use the contract to make a profit. If not, the option expires worthless and you lose the premium paid for the contract.
When to use: You expect prices to go down before the contract expires.
3. Call Spread
A Call Spread strategy involves buying a call option at one strike price and simultaneously selling another call option with a higher strike price, both having the same expiration date. This creates a limited risk and limited reward position.
By selling the higher strike call, you collect a premium that helps offset the cost of buying the lower strike call, reducing your upfront expense. However, your maximum profit is capped and realized if the underlying price finishes at or above the higher strike at expiry. If the price doesn’t rise enough, the spread may expire worthless or with limited profit.
When to use: You expect the price to go up moderately and want to reduce upfront costs.
4. Put Spread
The Put Spread strategy is the put equivalent of the Call Spread. You buy a put option at a higher strike price and sell a put option at a lower strike price, both expiring on the same date. This limits your downside risk and potential profit.
The premium received from selling the lower strike put helps reduce the cost of your long put. The maximum profit occurs if the asset price falls to or below the lower strike price at expiry. If the price doesn’t decline enough, your profit is limited or you could face a partial loss.
When to use: You expect prices to fall and want to reduce upfront costs.
5. Calendar Spread
A Calendar Spread is a strategy where you buy and sell options that have the same strike price but different expiration dates. Usually, you sell an option that expires soon (near-term) and buy an option with a later expiration date (long-term). For example, you might sell a call option that expires in one week and buy another call option with the same strike price that expires in one month.
This strategy benefits from how options lose value over time, a process called time decay. The option you sell (short-term) will lose value faster than the option you buy (long-term), letting you potentially profit if the price of the underlying asset stays near the strike price. It’s useful if you expect the price to stay relatively stable in the short term but move later on.
When to use: If you have a view on both short-term and long-term price movements or want to take advantage of time decay differences between options.
6. Diagonal Spread
A Diagonal Spread is similar to a Calendar Spread but with one key difference—you buy and sell options with different strike prices and different expiration dates. For example, you might sell a near-term call option with a higher strike price and buy a longer-term call option with a lower strike price.
This setup gives you more flexibility because you’re not only choosing different expiration dates but also different strike prices. The goal is to benefit from both time decay and potential price movement. The short-term option you sell decays faster, while the longer-term option you buy gives you exposure to price changes over a longer period. It can also help reduce the cost of your position compared to just buying a long-term option.
When to use: When you want more control over strike prices and expirations to take advantage of expected price moves and time decay across different time frames.
7. Straddle
A Straddle involves buying both a call and a put option at the same strike price and expiration date. This strategy profits when the price of the underlying asset makes a big move in either direction—up or down—because one of the options will increase significantly in value.
However, since you are buying two options, you pay two premiums, so the price move must be large enough to overcome this cost. If the asset price does not move much, both options lose value due to time decay, and you may lose the premiums paid.
When to use: You expect big price swings but aren’t sure which way it will go.
8. Strangle
A Strangle is similar to a Straddle but involves buying a call and a put option with the same expiration date but different strike prices. Typically, the call strike is above the current market price and the put strike is below. Because these options are usually out-of-the-money, the overall cost (premiums) is lower than a Straddle.
However, to make a profit, the underlying price must move beyond either strike by an amount large enough to cover the premiums paid. It’s a less expensive way to trade based on volatility but requires a bigger price move than a Straddle to be profitable.
When to use: You expect volatility and want a lower-cost way to trade on big price moves.
Closing Thoughts
Knowing these eight strategies on Binance Options RFQ can help you trade options better and smarter. From simple calls and puts to more advanced spreads and volatility plays, it’s important to choose the right strategy based on your risk profile and price expectations. No matter if you’re a big institution, a skilled retail trader, or a VIP client, Binance Options RFQ gives you the tools to trade efficiently.
Further Reading
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