Options Quotation Structure and Trading Rules
Introduction to the structure of option quotations, how to use the options chain, and the order placement interface. Trading rules including options contract multipliers, minimum trading units, and margin requirements will also be covered.
Options Chain
When you start using the options platform, the first thing you will see is the options chain. The options chain is a list of all available option contracts for a specific underlying asset, grouped by expiration date. It displays put options and call options, as well as all available strike prices for the selected expiration date, including key contract elements, trading volume, and more.
You may have used options chains in traditional financial markets, which include strike prices, with CALL contracts on the left and PUT contracts on the right, and the top row containing column headers for various contract data fields.
Gate Options Chain
Let’s take a look at the options chain on Gate. It is displayed in the browser, rather than in a desktop application like traditional options exchanges.
As you can see, Gate uses the same strike price structure in the middle, with CALL options on the left and PUT options on the right. The bid and ask columns for call options are on the left side, while the bid and ask columns for put options are on the right side. On Gate, bids are shown in green text and asks in red text, which helps your eyes locate information more quickly.
On Gate’s web platform, click the “Contracts” dropdown menu, then click “Options” below to enter the options chain.
Inside the green box, you can select an expiration date, for example, “250619”; then select a strike price, for example 101,000.
Click on the corresponding option, and a trading window will appear on the right side of the page. Select the trade direction: “Buy” or “Sell,” then click “Trade”.
Meanwhile, in the area marked by the red box, users can select different underlying assets for the options.
To navigate to different expiration dates, you can use the expiration date tab labels at the top.
Options Contract Multiplier
Options Contract Multiplier refers to the amount of the underlying asset represented by one option contract, used to calculate the actual value of the option contract, profit and loss, and margin requirements.
Definition and Purpose
- Definition: The contract multiplier determines how many units of the underlying asset one options contract represents.
- Example:
- The S&P 500 Index (SPX) option contract multiplier is 100 USD (i.e., 1 index point movement = 100 USD).
- Example:
- Purpose:
- To calculate option premiums, exercise profit/loss, margin requirements, etc.
- To standardize contract size, facilitating market trading and clearing.
Calculation formulas
Option Contract Value = Option Price × Contract Multiplier
PNL = (Settlement Price – Strike Price) × Contract Multiplier
Example: BTC Call Option
- Strike Price: $30,000
- Option Premium: $2,000 (corresponding to 1 BTC)
- Price at Expiration: $35,000
- Settlement Profit/Loss = ($35,000 - $30,000) × 1 = $5,000 (buyer profit)
- Buyer Net Profit = $5,000 - $2,000 (premium) = $3,000
The contract multiplier for Bitcoin options on Gate is 0.01
This means that one option contract controls 0.01 BTC. Suppose a trader holds one BTC call option with a strike price of $10,000. Bitcoin options on Gate are European-style options, meaning they cannot be exercised early and will be automatically exercised at expiration. These options are also cash-settled, which, as you may recall from the previous lesson, means the difference between the current price and the strike price is paid in cash to the option buyer.
Therefore, let’s assume this $10,000 call option expires when Bitcoin’s price is $11,000. Since it is cash-settled, the call option buyer receives the difference between the current price of $11,000 and the strike price of $10,000, which is $1,000. With a multiplier of 0.01, they will receive a total of 10 USD.
Minimum Trading Unit and Margin
On the Gate platform, click on an option contract in the options chain to open the trading order interface for that contract on the right side.
The number of contracts purchased calculated in BTC indicates how much BTC quantity the contracts you wish to buy can control, and can also be understood as the multiplier representing the impact of BTC price fluctuations on the option price.
As mentioned earlier, the options contract multiplier is 0.01, which means that purchasing one options contract controls 0.01 BTC. Therefore, when placing an order using BTC as the unit, the minimum order quantity is 0.01.
On the Gate platform, both quotes and collateral margin are denominated in USDT.
Options Quotation Structure and Trading Rules
Introduction to the structure of option quotations, how to use the options chain, and the order placement interface. Trading rules including options contract multipliers, minimum trading units, and margin requirements will also be covered.
Options Chain
When you start using the options platform, the first thing you will see is the options chain. The options chain is a list of all available option contracts for a specific underlying asset, grouped by expiration date. It displays put options and call options, as well as all available strike prices for the selected expiration date, including key contract elements, trading volume, and more.
You may have used options chains in traditional financial markets, which include strike prices, with CALL contracts on the left and PUT contracts on the right, and the top row containing column headers for various contract data fields.
Gate Options Chain
Let’s take a look at the options chain on Gate. It is displayed in the browser, rather than in a desktop application like traditional options exchanges.
As you can see, Gate uses the same strike price structure in the middle, with CALL options on the left and PUT options on the right. The bid and ask columns for call options are on the left side, while the bid and ask columns for put options are on the right side. On Gate, bids are shown in green text and asks in red text, which helps your eyes locate information more quickly.
On Gate’s web platform, click the “Contracts” dropdown menu, then click “Options” below to enter the options chain.
Inside the green box, you can select an expiration date, for example, “250619”; then select a strike price, for example 101,000.
Click on the corresponding option, and a trading window will appear on the right side of the page. Select the trade direction: “Buy” or “Sell,” then click “Trade”.
Meanwhile, in the area marked by the red box, users can select different underlying assets for the options.
To navigate to different expiration dates, you can use the expiration date tab labels at the top.
Options Contract Multiplier
Options Contract Multiplier refers to the amount of the underlying asset represented by one option contract, used to calculate the actual value of the option contract, profit and loss, and margin requirements.
Definition and Purpose
- Definition: The contract multiplier determines how many units of the underlying asset one options contract represents.
- Example:
- The S&P 500 Index (SPX) option contract multiplier is 100 USD (i.e., 1 index point movement = 100 USD).
- Example:
- Purpose:
- To calculate option premiums, exercise profit/loss, margin requirements, etc.
- To standardize contract size, facilitating market trading and clearing.
Calculation formulas
Option Contract Value = Option Price × Contract Multiplier
PNL = (Settlement Price – Strike Price) × Contract Multiplier
Example: BTC Call Option
- Strike Price: $30,000
- Option Premium: $2,000 (corresponding to 1 BTC)
- Price at Expiration: $35,000
- Settlement Profit/Loss = ($35,000 - $30,000) × 1 = $5,000 (buyer profit)
- Buyer Net Profit = $5,000 - $2,000 (premium) = $3,000
The contract multiplier for Bitcoin options on Gate is 0.01
This means that one option contract controls 0.01 BTC. Suppose a trader holds one BTC call option with a strike price of $10,000. Bitcoin options on Gate are European-style options, meaning they cannot be exercised early and will be automatically exercised at expiration. These options are also cash-settled, which, as you may recall from the previous lesson, means the difference between the current price and the strike price is paid in cash to the option buyer.
Therefore, let’s assume this $10,000 call option expires when Bitcoin’s price is $11,000. Since it is cash-settled, the call option buyer receives the difference between the current price of $11,000 and the strike price of $10,000, which is $1,000. With a multiplier of 0.01, they will receive a total of 10 USD.
Minimum Trading Unit and Margin
On the Gate platform, click on an option contract in the options chain to open the trading order interface for that contract on the right side.
The number of contracts purchased calculated in BTC indicates how much BTC quantity the contracts you wish to buy can control, and can also be understood as the multiplier representing the impact of BTC price fluctuations on the option price.
As mentioned earlier, the options contract multiplier is 0.01, which means that purchasing one options contract controls 0.01 BTC. Therefore, when placing an order using BTC as the unit, the minimum order quantity is 0.01.
On the Gate platform, both quotes and collateral margin are denominated in USDT.