European-style USDT-settled options
PowerTrade offers European-style USDT-settled options. European-style options can only be exercised at expiry and not before.
Options are priced in USDT terms using exchange rates based on a blend of respected price sources.
Non-deliverable BTC Option Contract Specifications
|Underlying Asset/Ticker||BTC index|
The symbol of an options contract consists of Underlying asset-Expiry date-Strike price-Option's type (C - call/ P - put).
This is a call option (C), with a strike price of 10,000 USDT, expiring on March 30, 2019.
Note: API traders will see contracts appear in this format, but the symbol rarely if ever appears in the PowerTrade app.
|Tick Size||0.01 USDT|
|Strike Prices||Strike prices are added and removed at PowerTrade’s discretion. Generally PowerTrade aims to maintain in-, at- and out of the money strike prices with new series being added when the underlying asset price moves significantly or demand is high for particular strikes.|
|Premium Quotation||Premiums are always quoted in USDT to 2 decimal places.|
|Expiration||0800 UTC on the expiration date.|
|Exercise Style||European style with USDT settlement. In-the-money European style options are exercised at the expiry. This is done automatically and no action from the trader is required.|
Exercise of an options contract will result in a payoff in USDT once a final settlement price has been determined, soon after the expiry time. The final settlement price is calculated using the average of the BTC index over the last 30 minutes before the expiry.
If the option is “in-the-money”, the payoff value in USDT is equal to the difference between the final settlement price and the strike price of the option times the contract size times the quantity held of the option.
Contract size for BTC options is 1BTC, meaning each contract represents 1 BTC as the underlying.
The initial margin is calculated as the amount of BTC that will be reserved to open a position.
Maximum (0.15 - OTM Amount/Underlying Mark Price, 0.1) + Mark Price of the Option
Short put :
Maximum (Maximum (0.15 - OTM Amount/Underlying Mark Price, 0.1) + Mark Price of the Option, Maintenance Margin)
The maintenance margin is calculated as the amount of BTC that will be reserved to maintain a position.
0.075 + Mark Price of the Option
Short put :
Maximum (0.075, 0.075 * Mark Price of the Option) + Mark Price of the Option
Mark price of an options contract is the current value of the option as calculated by the risk management system. Usually, this is the average of the best bid and best ask price. However, for risk management purposes, there is price bandwidth in place. At any time, the risk management system sets hard limits to the minimum and maximum IV allowed.
If the hard limit settings were at 60% minimum IV and 90% maximum IV, then an option with a midprice with IV higher than 90% will be mark priced at 90% IV. Any option with a midprice lower than 60% IV would be priced at 60% IV. Note that 60% and 90% are merely example percentages, and real rates vary and are at the sole discretion of PowerTrade.
|Fees||No fees charged at the moment, but this is subject to change|
|Allowed Trading Bandwidth||
Max Price (Buy order) = Mark Price + 0.04 BTC
Min Price (Sell order) = Mark Price - 0.04 BTC