Bybit Crypto Options Trading Tutorial 

By Shawn Dexter / July 27, 2022

Bitcoin Options Trading on Bybit

Crypto Options Trading has been unavailable to the mass public for a very long time. However, Bybit  recently released their Bitcoin Options Trading Platform. And boy are we excited!

Now, we understand that Options Trading may be intimidating to many folk! We’ve been there. We’ve been just as scared. But it’s actually a lot simpler than it looks!

Options Trading: Crypto Just Got Safer 

It may surprise you to hear us say this: Crypto just got safer because of Options Trading! 

Most people think that Derivatives like Options are far too risky and are only for gamblers. But in truth, Bybit’s introduction of Options trading has actually made their platform safer than other Futures & Derivatives platforms that don’t have access to Options.

One of the golden tenets of the Mango Way of Trading - is to Risk Manage First, Profits Second! And now with Options Trading, Bybit offers increased safety by allowing you easier risk management.

Hedging with Calls & Puts using Options Trading

Many folk don’t know this: Options derivatives are primarily used for HEDGING.

Yes, that’s right. Professionals use options primarily to hedge their positions. Now, don’t get me wrong - there are definitely enough people who gamble using Options Trading. But they aren't professional traders with any size.

The big traders use Calls & Puts to hedge against upside risk, as well as downside risk.
“Wait - what do you mean by ‘upside risk’ ?? “ - Yes, there is upside risk as well.

Farmers, for example, use derivative contracts like Options to hedge against upside risk all the time. Farming is a very risky business - sudden changes in weather or pest-infestation can cause massive supply issues and increase the farmer’s costs, and hence reduce revenue.

To mitigate this risk - farmers protect themselves using Options & Futures derivatives trading.  Hedge Funds & Corporates routinely use options contracts to ensure that a price of an asset does not run away from them.

Bitcoin Options Can Protect Against Fomo

Now, you might be thinking: “Well, this won’t apply to me, I’m not a farmer or a hedge fund”

Well, that may be true. But have you not ever worried about missing a certain price-point of the market? For example at the moment, Bitcoin is currently sitting at a key-level $20,000. Many people are wondering if this is the bottom. You might be waiting for confirmation about a certain level?

But what if you want to go on vacation? And Bitcoin breaks above that level and runs away from you? Hell, by the time you come back Bitcoin could be at $40,000 again!

This is precisely where Call Options help. You can protect yourself against the risk of Bitcoin running away from you by simply buying a call Option. You can learn how to do in this great video where Krisha explains it all super simply:

Crypto Options Trading on Bybit : How to use Call Options

Bitcoin Options Can Protect Against Downside

Similarly, using Bybit’s Options Trading platform can allow you to protect yourself against a massive dump. By using Put Options on Bybit, you can protect your portfolio from risk without having to use risky stop losses. 

How many times have you gotten “wicked out” of a good position only to see price go up? …way way up?

Imagine getting a great bid on Bitcoin or Ethereum. But now you have to leave for your long-weekend Cottage Vacation. Uh oh. What do you do? Do you place a stop loss? How far?

Most people place tight stop losses in crypto because they are afraid of the volatility. And inevitably, they come back to a position that got stopped out and now is much higher than before. Ouch.

Instead of using a stop-loss, we can now purchase Puts on Bybit’s Option Trading platform to protect ourselves! It reduces stress, and reduces risk 🙂

Bybit Crypto Options Trading: Stress Free

The Crypto markets are extremely volatile. And it’s precisely this volatility that plays with people’s emotions and causes them to make mistakes.

 “Oh God, what if Bitcoin pumps while I’m on vacation and I miss it → I’ll just buy here to be safe”

But then when you get back from vacation, you see a price of  $13k. Ouch.

Instead, you could have simply bought a Call option (a few strikes high) and gone on vacation. Sure, it would cost you a few hundred dollars. But it’s way better than coming up to a $10,000 loss!! Ouch. And on the flip side, if Bitcoin actually breaks up while you’re on vacation, you stand to gain a lot of profit! 

Options are literally insurance contracts! For both sides - the bulls & the bears. And Bybit introducing them on their platform has now allowed us to “insure” are positional biases.