What Trading Products can I Trade on OptionBlitz?

An OptionBlitz Trading Product Review

OptionBlitz
6 min readJan 23

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OptionBlitz offers a range of trading products and a suite of features to support the user’s experience. The trading platform’s liquidity is provided in the form of USDC tokens by liquidity providers who receive a revenue share in exchange for their investment.

The entire platform is built on Arbitrum and uses decentralised Chainlink price oracle systems to get data feeds into the smart contracts, simultaneously transmitting real-time prices to the UI.

To get started clients just need to buy USDC and can get this by purchasing from our payment gateway partners inside the app or by connecting to the built-in coin swap services to trade altcoins for the native token.

DIGITAL OPTIONS

BINARY OPTION

A Binary Option is a financial product where the parties involved in the transaction are assigned one of two outcomes based on whether the option expires in the money. Binary options depend on the outcome of a “yes or no” proposition, hence the name “binary.” Traders receive a payout if the binary option expires in the money and incur a loss if it expires out of the money.

How a Binary Option Works

Binary options have an expiry date and/or time. At the time of expiry, the price of the underlying asset must be on the correct side of the strike price (based on the trade taken) for the trader to make a profit.

A binary option automatically exercises, meaning the gain or loss on the trade is automatically credited or debited to the trader’s account when the option expires. That means the buyer of a binary option will either receive a payout or lose their initial investment in the trade.

Binary options have been developed for the platform which offer traders the ability to speculate on simple changes up/down in the underlying price of an asset. Expirations range from 10 seconds to 1 hour.

TOUCH / NO- TOUCH OPTIONS

Touch and No-Touch options or Knock-in/Knock-out digitals are also supported allowing traders to fully customise their trading parameters with the ability to set custom barrier levels and receive fair and transparent pricing for successful predictions.

What Is a One-Touch Option?

A one-touch option pays a premium to the holder of the option if the spot rate reaches the strike price at any time prior to option expiration.

One-touch option allows investors to choose the target price, time to expiration, and the premium to be received when the target price is reached. Compared to vanilla calls and puts, one-touch options allow investors to profit from a simplified yes-or-no market forecast. Only two outcomes are possible with a one-touch option if an investor holds the contract all the way through expiration:

  1. The target price is reached and the trader collects the premium paid plus the negotiated payout
  2. The target price is not reached and the trader loses the premium paid to open the trade

Like regular call and put options, most one-touch option trades can be closed before expiration for a profit or a loss depending on how close the underlying market or asset is to the target price.

One-touch options are useful for traders who believe that the price of an underlying market or asset will meet or breach a certain price level in the future, but who are not certain that that price level is sustainable. Because a one-touch option has only a yes-or-no outcome by expiration, it is generally less expensive than other exotic binary options like double one-touch or barrier options.

CLASSIC OPTIONS (AMERICAN & EUROPEAN OPTIONS)

What Is an American Option?

American options are traditional derivatives and ours are no different. We offer expiration ranges from 10 minutes to 24 hours across a large range of asset classes.

An American-style option allows investors to capture profit as soon as the stock price moves favourably, and to take advantage of dividend announcements as well.

  • An American option is a style of options contract that allows holders to exercise their rights at any time before and including the expiration date.
  • An American-style option allows investors to capture profit as soon as the stock price moves favourably.
  • American options are often exercised before an ex-dividend date allowing investors to own shares and get the next dividend payment.

HOW DO AMERICAN OPTIONS WORK?

American options outline the timeframe when the option holder can exercise their option contract rights. These rights allow the holder to buy or sell — depending on if the option is a call or put — the underlying asset, at the set strike price on or before the predetermined expiration date. Since investors have the freedom to exercise their options at any point during the life of the contract, American-style options are more valuable than the limited European options. However, the ability to exercise early carries an added premium or cost.

HOW DO EUROPEAN OPTIONS WORK

A European option is a version of an options contract that limits execution to its expiration date. In other words, if the underlying security such as a stock has moved in price, an investor would not be able to exercise the option early and take delivery of or sell the shares. Instead, the call or put action will only take place on the date of option maturity.

  • A European option is a version of an options contract that limits rights exercise to only the day of expiration.
  • Although American options can be exercised early, it comes at a price since their premiums are often higher than European options.
  • Investors can sell a European option contract back to the market before expiry and receive the net difference between the premiums earned and paid initially.
  • The Black-Scholes option model is often used to value European options.

TURBOS

WHAT ARE TURBOS?

Our flagship trading product! Turbos are leveraged products and function very similarly to perpetual futures but with some differences. You can go long or short but with Turbos your risk is capped, there is no margin. Instead, you have a knock out level and if this price is hit then your position is terminated. You can settle a Turbo at any time and there is no expiration time.

You control the knockout barrier by configuring the ‘protection’ level and if this level is hit your position is liquidated. Optionblitz Turbos also have a funding rate too similar to perpetual futures/swaps although due to the trade specification of Turbos, swap rates are fundamentally lower.

Just like perpetuals, Optionblitz Turbos have a Funding Rate Mechanism built in. This balances long and short positions by charging the side which is the most biased, an interest rate. These Turbos fundamentally have lower Funding Rates than perpetuals because they cater to traders that hold positions for under a day. They also allow much higher leverage safely, up to 200x since there are no margin calls. Most perpetuals have a liquidation level at 50% of margin so in volatile markets, high leverage is impossible.

We believe we have introduced a new instrument that fits a space in the market and can be combined with other products to produce sophisticated trading strategies.

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OptionBlitz

Decentralised options and social trading, built on Arbitrum.