Trading financial derivatives has become increasingly accessible, and options are among the most versatile tools for managing risk and capitalizing on market movements. Bybit offers a robust options trading platform that combines simplicity for beginners with advanced features for experienced traders. This guide provides a comprehensive overview of how Bybit Options work, their benefits, key trading tools, and practical examples to help you understand the mechanics and strategic potential of options trading.
What Are Options?
An option is a type of derivative contract that gives the buyer the right—but not the obligation—to buy or sell an underlying asset at a predetermined strike price on or before a specified expiry date. To obtain this right, the buyer pays a premium to the seller. There are two primary types of options:
- Call Option: Grants the right to buy the underlying asset.
- Put Option: Grants the right to sell the underlying asset.
The seller (or "writer") of the option receives the premium and assumes the obligation to fulfill the contract if the buyer decides to exercise it.
Bybit offers European-style, cash-settled options denominated in USDT and USDC, which simplifies pricing, settlement, and profit calculations. Key features include:
- ✅ European-style exercise: Options can only be exercised at expiration.
- ✅ Cash settlement: No physical delivery of assets—settlement is in stablecoins.
- ✅ Automatic exercise: In-the-money options are automatically exercised at expiry.
- ✅ Final settlement price: Determined by the average index price over the last 30 minutes before expiration.
This structure enhances transparency and reduces complexity, making it ideal for both new and seasoned traders.
Benefits of Trading Options on Bybit
Options trading offers several strategic advantages, especially when executed on a reliable platform like Bybit.
Risk Control with Asymmetric Reward Potential
One of the most compelling benefits is asymmetric risk-reward exposure. Buyers of options can limit their maximum loss to the premium paid while retaining unlimited (for calls) or substantial (for puts) profit potential.
👉 Discover how options can amplify your trading strategy with limited downside risk.
For example:
- A Call Option buyer profits if the market rises above the strike price plus premium.
- A Put Option buyer profits if the market falls below the strike price minus premium.
This makes options an excellent tool for hedging or speculating without risking large amounts of capital.
Diverse Trading Strategies Across Market Conditions
Options enable traders to build strategies for bullish, bearish, neutral, or volatile markets. Whether you're using simple long calls/puts or complex multi-leg spreads, Bybit supports a wide range of approaches.
Common strategies include:
- Covered calls
- Protective puts
- Straddles and strangles
- Iron condors
These strategies allow traders to generate income, hedge positions, or profit from volatility—regardless of market direction.
No Funding Fees or Liquidation Risk for Buyers
Unlike perpetual futures, option buyers do not face funding fees or liquidation risk. Your maximum loss is capped at the premium paid. This makes options a safer alternative for directional bets.
⚠️ Note: Option sellers, however, face potentially unlimited risk and may be subject to margin requirements and liquidation.
Understanding Bybit’s Options Trading Interfaces: Explore, Easy, and Pro
Bybit offers three distinct trading interfaces tailored to different experience levels: Explore, Easy, and Pro.
Option Explore – Ideal for Beginners & Observers
Designed for those new to options or interested in tracking market sentiment, Explore highlights popular contracts based on volume and open interest.
Key Features:
- Recommends high-liquidity options contracts
- Allows tracking of large trader activity
- Simple, intuitive interface
Best suited for users who want to observe trends before actively participating.
Option Easy – Simplified Trading for New Traders
Option Easy provides essential data in an easy-to-digest format, helping beginners understand profitability, break-even points, and risk exposure.
Key Features:
- Clear P&L visualization
- Real-time cost and price movement indicators
- Supports buying all available options contracts
Perfect for traders building foundational knowledge.
Option Pro – Advanced Tools for Experienced Traders
For sophisticated users, Option Pro delivers full control with professional-grade tools.
Key Features:
- Full options chain visibility
- Support for single and multi-leg orders
- Customizable P&L analysis
- Ability to create complex strategies (e.g., spreads, straddles)
👉 Access advanced trading tools that empower strategic flexibility and precision.
This mode is essential for traders executing nuanced strategies based on volatility, time decay, or market structure.
Key Options Terminology
Before trading, it’s crucial to understand these core concepts:
| Term | Definition |
|---|---|
| Call Option | Right to buy the underlying asset at the strike price |
| Put Option | Right to sell the underlying asset at the strike price |
| Underlying Asset | The asset (e.g., BTC) the option is based on |
| Strike Price | Predefined price at which the asset can be bought/sold |
| Expiry Date | The date when the option contract expires |
On Bybit, option symbols follow this format: [Underlying]-[Expiry Date]-[Strike Price]-[Type]
Where:
C= CallP= Put
Examples:
BTCUSDT-8NOV23-32000-P: BTC/USDT Put Option, $32,000 strike, expires Nov 8, 2023BTC-15FEB25-92000-C: BTC/USDC Call Option, $92,000 strike, expires Feb 15, 2025
Note: Only 2025 expiry dates are retained per guidelines.
How Call and Put Options Work: Buyer vs Seller Dynamics
Understanding the incentives and risks for both parties is key to successful options trading.
Call Options
| Role | Max Gain | Max Loss | Exercise Condition |
|---|---|---|---|
| Buyer | Unlimited | Premium Paid | Profitable if market > strike + premium |
| Seller | Premium Received | Unlimited | Obligated if market ≥ strike |
Buyers profit when prices rise; sellers collect premiums but take on significant risk.
Put Options
| Role | Max Gain | Max Loss | Exercise Condition |
|---|---|---|---|
| Buyer | Strike − Premium | Premium Paid | Profitable if market < strike − premium |
| Seller | Premium Received | Strike + Premium | Obligated if market ≤ strike |
Put buyers hedge against downturns; sellers earn income but risk large losses in falling markets.
Types of Options Orders
There are four basic order types:
- Buy Call
- Sell Call
- Buy Put
- Sell Put
Each serves different strategic purposes—from speculation to income generation.
Practical Trading Examples
Example 1: Bullish Outlook with Call Options
In November 2023, BTC trades at $35,000.
Ann believes BTC will rise above $37,000 by month-end and buys a Call Option with:
- Strike: $37,000
- Expiry: Nov 31, 2023
- Premium: $1,000
Bob sells this call, collecting the $1,000 premium.
Scenario A: BTC settles at $40,000
- Ann exercises: Profit = ($40k − $37k) − $1k = **$2,000**
- Bob loses: ($37k − $40k) + $1k = **−$2,000**
Scenario B: BTC settles at $34,000
- Ann doesn’t exercise: Loss = $1,000 (premium)
- Bob keeps premium: Profit = $1,000
Example 2: Bearish Outlook with Put Options
In December 2023, BTC trades at $38,000.
Bob expects a drop and buys a Put Option at:
- Strike: $37,000
- Expiry: Dec 31, 2023
- Premium: $800
Ann sells the put.
Scenario A: BTC settles at $35,000
- Bob exercises: Profit = ($37k − $35k) − $800 = **$1,200**
- Ann loses: ($35k − $37k) + $800 = **−$1,200**
Scenario B: BTC settles at $39,000
- Bob doesn’t exercise: Loss = $800
- Ann keeps premium: Profit = $800
Frequently Asked Questions (FAQ)
What is the difference between American and European options?
European options can only be exercised at expiration, while American options can be exercised anytime before expiry. Bybit offers European-style options for clearer settlement timing.
Can I sell options on Bybit?
Yes—but only in Option Pro. Beginners using Explore or Easy can only buy options.
How is the final settlement price calculated?
It’s based on the average index price during the 30 minutes before expiration, ensuring fairness and reducing manipulation risk.
What happens if my option expires out of the money?
It expires worthless. Buyers lose only the premium; sellers keep it as profit.
Are Bybit options physically or cash-settled?
All Bybit options are cash-settled in USDT or USDC—no need to deliver actual crypto.
Can I hedge my crypto holdings with options?
Absolutely. Buying put options is a common way to protect against price drops without selling your assets.
👉 Start hedging your portfolio with precision-engineered options strategies.