What is an option?
An option is a contract that gives the buyer the right (not the obligation) to buy or sell an asset at a specific price (the strike) before a specific date (the expiry). The seller of the option collects a fee called premium upfront, in exchange for taking on the obligation. On b1nary, you are the seller. You earn premium. A market maker is the buyer.Key terms
Selling a put
You deposit USDC as collateral and choose a strike price below the current market price. You earn premium immediately.- Price stays above your strike (OTM): your USDC is returned. You keep the premium.
- Price drops below your strike (ITM): you buy the asset at your strike price. You still keep the premium, so your effective purchase price is
strike - premium.
Selling a covered call
You deposit the asset as collateral and choose a strike price above the current market price. You earn premium immediately.- Price stays below your strike (OTM): your asset is returned. You keep the premium. Income on your holdings.
- Price rises above your strike (ITM): you sell the asset at your strike price. You keep the premium plus the appreciation from current price to strike.
Risk profile
What you cannot lose: more than your collateral. b1nary is fully collateralized. No margin, no liquidations.