Crypto Options Trading: Should You Trade Bitcoin Calls or Puts?

The crypto exchange platform market grew at a compound annual growth rate of 18.57% between 2018 and 2023, being valued around $35 billion in 2023 and expected to grow to $109 billion by 2028! The rise of cryptocurrency options has been impressive to say the least (at least according to these stats) with Bitcoin being at the forefront of the movement, the clear market leader. Options traders can speculate on the direction of Bitcoin’s value just like they can bet on traditional stock options.

Should you trade Bitcoin calls or puts in this booming market?

We’ll explore the crypto options boom that has been happening since 2018, break down calls vs. puts, and provide a framework for deciding which strategy suits different trader profiles. Keep reading to learn if trading Bitcoin calls or puts could provide some potential profit opportunities that fit with your trading style and risk tolerance.

The Crypto Options Boom—What’s Happening?

The crypto options boom has been happening for a few years now. The key to understanding what is happening and why it’s been gaining traction and popularity with retail investors is knowing what crypto options are exactly, the market trends that have been happening around these options since about 2018, and the key drivers behind the demand for these options in recent years.

Overview of Crypto Options

Crypto options are contracts giving the right, but not obligation, to buy/sell Bitcoin at a set price by a specific date. They work very similarly to traditional options contracts tied to stocks. These crypto options allow traders to control a larger amount of cryptocurrency with a smaller amount of capital. It can lead traders to gain amplified profits, but they also stand to incur bigger losses than normal if their options trades don’t go in their favor.

Market Trends

The cryptocurrency exchange platform market is growing fast. The market was valued at almost $35 billion in 2023, and is expected to grow to a value of around $109 billion by 2028. Looking all the way back at the time between 2018 and 2023, the crypto exchange platform market grew at a compound annual growth rate of 18.57%, suggesting a strong, viable investment market with plenty of opportunities for continued growth.

Key Platforms and Cryptos Offered

A few of the crypt exchange platforms that have been making a big splash with options traders and investors are Deribit, Binance, and CME (Chicago Mercantile Exchange). Anyone interested in trading options on cryptocurrencies will find a wide array of cryptos offered for traders on these platforms including the following: Bitcoin, Litecoin, Dogecoin, XRP, Micro Bitcoin, SOL, Micro SOL, and Ethereum.

Key Drivers

• Institutional Adoption: One of the big reasons why the crypto options market has been gaining traction and growing for the last several years is due to financial institutions, large-scale organizations, and corporations integrating cryptos and other blockchain technologies into their businesses.
• Bitcoin’s Volatility: When it comes to trading options online, volatility can play a large role in determining future stock prices, but it also serves as the basis for several options trading strategies and how they secure a profit for investors. Bitcoin’s volatile price movements represent some great opportunities for traders who want to bet on the crypto’s future price movements, creating some substantial demand for Bitcoin options in particular.
• Hedging Demand: Bitcoin options have also grown in demand due to the fact that they can be used for hedging with stock options trading. Options allow for leverage exposure to Bitcoin prices and can therefore be used as a hedging strategy to mitigate potential risks. The maximum loss is limited to the premium paid.

Why It Matters

Take a look at the key drivers for the boom of the Bitcoin options market. Some of these signal opportunities for retail traders to make some money trading Bitcoin options. Traders can take advantage of the volatile nature of Bitcoin’s value to execute some great volatility plays. Another opportunity for retail traders would be using Bitcoin options as a hedge for stock option positions in their portfolios.

In fact, just like regular stock options, trades can use calls and puts on Bitcoin options to speculate on the price direction. We’ll talk about this in greater detail in the following sections, but it provides a terrific opportunity for investors looking to diversify their positions and hedge potential risks.

Bitcoin Calls—Betting on the Upside

Let’s talk about Bitcoin calls, which allow traders to bet on the price of Bitcoin going up, just as you might bet on a stock’s price going up when trading traditional stock options online. We’ll talk about how Bitcoin calls work, some of the benefits and risks that come with these trades, and the best situations for using Bitcoin calls.

A Bitcoin call option is a contract that gives the holder the right (not the obligation) to buy Bitcoin at a certain strike price by a certain expiration date.

Using Bitcoin calls is a good choice if you feel that the price of Bitcoin will rise. The call option lets you buy Bitcoin as the strike price even if the market price is higher. When Bitcoin trades above the strike price, the trader has the option to buy it cheaper and lock in a profit for themselves (minus the cost of entering the trade).

There is a scenario where you can lose money on a Bitcoin call, but we’ll talk about this more in the next section.

How It Works

Let’s look at a simple example of a Bitcoin call option to show you how it works and how investors can make a profit. Buy a $60,000 call when BTC is at $58,000; profit if BTC rises above $60,000, plus you get to keep the premium you received upfront for entering the Bitcoin call trade.

Key Terms

Bitcoin calls work very much the same as other call options in the stock options trading market. Let’s run through some key terms in the off-chance that you aren’t familiar with some of the terminology we’ve been using so far in this guide.

• Strike Price: Also known as the exercise price, the strike price is the fixed price of the call option contract that determines the price at which the underlying asset can be bought if the option is exercised.
• Premium: This is the price paid by the buyer to the seller for the right to buy or sell an underlying asset at a predetermined price within a specified period.
• Expiration Date: This refers to the predetermined date on which an option contract ceases to be valid. This means that the holder of the option has lost their right to exercise the contract. The expiration makes the contract null and void.

Why Trade Calls?

The biggest reason to trade calls on Bitcoin, stocks, or any other kind of security or asset is because you expect there to be a rally. In other words, you’re expecting Bitcoin to rise in value. Trading calls are best when investors or traders have a bullish outlook on the market. They have an optimistic expectation of the markets, that they will perform well in the future.

Bullish Outlook Explained

A few signs that there’s a positive outlook on Bitcoin are that there may be post-halving pumps and ETF approvals. Halvings reduce the rate at which new coins are created and lower the available amount of new supply—this limited supply creates a demand for Bitcoin options from investors, which drives up the price/value of Bitcoin. The other significant signifier of a bullish outlook for Bitcoin options is the approval of ETFs for Bitcoin, which was done by the SEC in January 2024.

Leverage

The other big reason to trade options on Bitcoin is for the simple fact that investors and trades can enjoy amplified gains with limited capital. In other words, traders can control a large position with Bitcoin options, and they don’t need a lot of money to manage this position. However, there’s the downside of the investor getting the trade wrong and then incurring bigger losses than normal.

Risks

Let’s check out the primary risks that come with taking on Bitcoin call options. These are important to keep in mind for traders looking to map out their risk profile.

• Time Decay (Theta): Value erodes as expiration nears if BTC doesn’t move. If the underlying asset does not move above the strike price by the expiration date, the call option expires as worthless, and the traders lose their entire premium.
• Volatility Swings: Premiums can be expensive in a hyped market, especially when you’re talking about Bitcoin, which experiences extreme volatility swings. Traders also run the risk of incurring big losses if the price doesn’t move as expected.

Real-World Scenario

A great hypothetical case study for reaping a profit from trading Bitcoin options would be to buy calls on Bitcoin right before a breakout. This can benefit the trader because the call option will turn a profit when the valuation of Bitcoin goes up. Monitor what’s going on with Bitcoin and other cryptos, and when you expect the value to go up, use a call option to lock in a possible profit down the road.

Bitcoin Puts—Profiting from the Downside

Bitcoin put options can be used to profit on the downside, in other words, a decline in the valuation of Bitcoin or other cryptocurrencies. Being the exact opposite of the call option, these put options allow traders to speculate on Bitcoin’s downward trends and make money from the trend.

A Bitcoin put option is a contract that gives the holder the right (not the obligation) to sell Bitcoin at a certain strike price by a certain expiration date.

Using Bitcoin puts is appropriate when you expect Bitcoin’s value to go down. If the stock price falls below the strike price, traders can buy the stock at a lower market price and then sell it at a higher price to secure a profit. Traders can also use Bitcoin put options to hedge against potential losses in their portfolios. If you already own shares of Bitcoin and feel there’s about to be a price decline, you can buy a put option to limit the incoming losses.

How It Works

Let’s take a look at a simple example of using put options to your advantage when speculating on the price movements of Bitcoin. Buy a $55,000 put when BTC is at $58,000; profit if BTC drops below $55,000. You would have to subtract the amount of the premium (the cost to enter the trade) from the bottom line to figure out your profit potential.

With a put option, just like with the call option, you’re dealing with a strike price, expiration date, and a premium paid to enter the trade. For more information on these terms, if you’re unfamiliar, please check out our section on Bitcoin call options under “How It Works.”

Why Trade Puts?

The reason that traders would want to use put options when trading Bitcoin is that they have a bearish outlook on the crypto exchange markets. A good example of when to use put options when trading Bitcoin is when traders are anticipating crashes in Bitcoin’s price around events like regulatory crackdowns or macro downturns. When you’re expecting a downturn in Bitcoin’s price (for any reason), use a put option to capitalize on the downward price movement to secure a profit.

Not only are put options for Bitcoin good around speculating that dropoffs in the crypto’s value, but they’re a good hedge for traders too. Use them to protect a Bitcoin portfolio against losses.

Risks

The risks of trading put options on Bitcoin come with similar risks to trading call options, although it comes with the added risk of Bitcoin and its resilience, undoing put option strategies.

• Time Decay (Theta): As the expiration date gets closer, the value of the Bitcoin put option will erode in value. If the underlying asset does not move below the strike price by the expiration date, the call option expires as worthless, and the traders lose their entire premium.
• Volatility Swings: Bitcoin is well known for being volatile, which can result in big losses for traders if they get the direction incorrect.
• Bitcoin’s Resilience: BTC often defies bearish predictions, leaving puts worthless. Because of its unpredictable volatility at times, it can be risky trading both calls and puts options around Bitcoin because there’s a good chance that strong predictions can be rendered utterly useless.

Real-World Scenario

Bitcoin is known for losing value during a market correction, so it could be beneficial for traders to use a put option on their Bitcoin shares to make money in a possible downturn. The likeliest scenario is that the value of Bitcoin will go down following the correction, and the trader will make money with their put option. However, Bitcoin is known for its resilience, and this downturn that’s being predicted could be wrong, resulting in the trader losing the money they paid to enter the put option (the premium).

Calls vs. Puts—A Side-by-Side Comparison

We’ve talked at length about call and puts options, how they can be used for trading Bitcoin in online exchanges. However, it can be a lot of information to take in and compare, so we’ve included this side-by-side comparison section of the guide, for your convenience.

Market Direction

Using a call or put options ultimately depends on which way you see the market moving—this is the main difference between these two types of options contracts.

• Calls: Using call options is a bullish bet, a prediction that the stock price or the value of the option will go up. Traders should use these options if they see the value of Bitcoin going up in the near term.
• Puts: On the other hand, a put is a bearish bet where traders would see the value of Bitcoin going down, locking in a profit when there’s a downward turn. Puts can also be used as a hedge to safeguard against potential losses in the underlying asset.

Risk/Reward Profile

What kind of opportunities are available using calls and puts, and what risks are inherent in each of these strategies? Let’s find out.

• Calls: If the value of Bitcoin rises above the breakeven point of the call option, the profit potential is theoretically unlimited as the price of the crypto could technically go into eternity. So calls not only come with unlimited upside, but there’s limited downside on the other side of the coin. The max risk is the loss of your premium, the price paid to enter the trade.
• Puts: The highest reward can happen in Bitcoin crashes where the value plummets well below the strike price set up at the onset of the trade. The limited downside you see with call options is the same highest potential loss with put options. Your biggest loss is the price you paid to enter the trade.

Cost Considerations

Currently, there’s a higher demand for Bitcoin put options, so they are more expensive (on average) than call options. This is ultimately a reflection of investors and their risk aversion to Bitcoin. It’s an asset with higher implied volatility, which can be used well for downside protection.

Should You Trade Bitcoin Calls or Puts?

To find out when it’s appropriate to use Bitcoin calls or puts, it’s key to keep an eye on the market conditions to find out if the market direction is bullish or bearish, but it’s also important to consider your trading goals, skill level, and your personal tolerance for risk in your investments. It’s partly to do with market conditions you can’t control, and then a lot of it has to do with your trading style and goals.

Assess Your Goals

Calls and puts on Bitcoin and other cryptocurrencies can be used for risk management purposes (puts),  but they can be used to lock in a profit around price speculations (calls). Depending on what your goals are as a trader, you can make some money using Bitcoin call or put options.

• Speculation: Traders can buy call options if they feel the price of Bitcoin will go up, making it a great strategy to profit from Bitcoin’s growth. They can also speculate on declines in Bitcoin’s value by using put options, which secure a profit when the crypto market is in a downturn.
• Risk Management: Buying Bitcoin put options can act as a form of insurance, which lets traders limit potential losses on their position if the price goes down.

Market Conditions

Using a call or put largely depends on the current market conditions and where a lot of traders see the price of Bitcoin going.

• Bullish Signals: If it looks like the price of Bitcoin is going to rise, it’s best to use call options. Adoption news is a good bullish sign for investors where more people would be interested in trading options around it, increasing demand for options and making the price of Bitcoin go up in the process.
• Bearish Signals: When Bitcoin looks like its value is going to decrease, it’s a good time to use put options. An example of a bearish signal for Bitcoin would be inflation fears, where many are speculating that the value will drop.

Risk Tolerance

Using calls or puts on Bitcoin also comes down to the trader’s risk tolerance, or their willingness to take on risks to seek greater reward. Calls are generally better for more aggressive traders, while puts are better for conservative investors. We’ll explain more below.

• High-Risk Appetite: Buying Bitcoin calls or selling naked puts are good options for traders who have a more aggressive approach and a higher risk appetite.
• Conservative: Puts can be used by more conservative investors for hedging purposes or to perform speculative moves to secure some small, predictable returns.

Skill Level

Using calls or puts on Bitcoin options is also dependent on the investor’s skill level and personal background experience. Some strategies are better for beginners, and others are more suitable for seasoned or aggressive traders.

• Beginners: A great way to dip your toes into the world of trading Bitcoin options would be to start with calls in trending markets. This can lead to some smaller, but predictable returns that could help you gain the experience needed to build confidence.
• Advanced: If you’re a seasoned investor, you can do combinations of calls and puts on Bitcoin options for volatility plays to secure bigger profits.

An Actionable Tip From Us

To gain additional experience and to build your confidence when trading Bitcoin options, we’d suggest using demo accounts or paper trading simulators on your platform of choice (Deribit has these) to test strategies and do so without risking any of your own capital in the process.

Tools and Platforms for Trading Bitcoin Options

To trade Bitcoin options online, you have to use a competitive and dynamic trading platform or exchange if you’re interested in making money on price speculation or hedging. We’ve outlined our recommendations below on the best platforms and exchanges the market currently offers for Bitcoin options trading.

Popular Exchanges

Let’s look at some of the best exchanges you can use in 2025 to trade options on Bitcoin and other popular cryptocurrencies.

• Deribit—A cryptocurrency exchange that specializes in options/futures contracts, derivatives trading, and crypto trading via Bitcoin and Ethereum. Deribit has a focus on experienced traders and institutional investors, offering features like advanced risk management, institutional-grade infrastructure, and global reach.
• Binance—Crypto traders can use this platform to buy, sell, trade, and store digital assets and cryptos like Bitcoin, Ethereum, and altcoins. Tools offered are futures trading, margin trading, spot trading, and options trading.
• CME (Chicago Mercantile Exchange)—The world’s leading derivatives marketplace, the Chicago Mercantile Exchange is made up of four exchanges, including the CME, CBOT, NYMEX, and COMEX. They offer cryptocurrency futures and options trading for Bitcoin and Ethereum.

Key Features

What kind of features make these the best Bitcoin trading apps? These are the factors we looked for when forming this list of platforms, and this is the criteria you should use if you’re interested in looking at other apps outside of our recommendation list.

• Low Fees—Compared to other trading apps and exchanges, these three choices are some of the best in terms of fees charged. You can keep your overhead relatively low, which means you can keep more money in your account when you bring in a profit.
• Liquidity—You’ll find Bitcoin options markets where there’s active trader participation and higher demand, which leads to an environment where you can buy and sell options for Bitcoin quickly and easily.
• Reliable Charting Tools—Each of these platforms comes with dynamic charting tools which help traders visualize and analyze the data needed to make the best Bitcoin option trades. Access a wide array of helpful charts and graphs for pinpointing the clearest trends and patterns while also spotting the best opportunities the Bitcoin market is offering at the moment.

Caution

You really can’t go wrong with the Bitcoin trading platforms in our recommendation list, but if you want to branch out to find other apps or platforms that you’d be more interested in using, that’s your prerogative. However, we would warn you to steer clear of unregulated platforms and scams that are common in the crypto space. Make sure that whatever app you choose that it’s fully regulated and registered with the proper authorities.

Navigating the Boom: Choosing Wisely in Crypto Options

The crypto options boom continues as it has since around 2018 when it got started. The calls vs. puts debate is largely dependent on the current market conditions (bullish or bearish outlooks), but choosing the right strategy when trading Bitcoin and other cryptos is also centered around a trader’s personal style, tolerance for risk, and current skill level. Taking on some of these Bitcoin strategies takes some considerable experience and confidence. Success depends on understanding Bitcoin’s volatility, market timing, and personal strategy.

If you’re interested in gleaning some knowledge from other options traders who have been seen a lot, you can always join a community to learn and gain new ideas as you dip your toes into the waters of Bitcoin options. As with any kind of online trading, consider using a demo account or paper trading to start trading using a balance of virtual capital for practice.