Crypto Options

Crypto options are similar to traditional finance (TradFi) options, except the underlying assets are crypto or crypto-related contracts. Compared to the crypto spot and futures markets, crypto options still represent a small but growing market.

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Executive Summary

• Crypto options are similar to traditional finance (TradFi) options, except the underlying assets are crypto or crypto-related contracts. They can be used for hedging and provide leveraged exposure to price movements. However, options can be complex to understand and may lead to higher investment risks.
• Compared to the crypto spot and futures markets, with $62 billion and $188 billion average daily trading volume in the past 12 months, respectively, the average daily trading volume of crypto options was ~$3 billion in the same period. The monthly volume grew by 47% from May 2024 to May 2025.
• Centralised crypto exchanges (CEXs) had an average monthly trading volume of $97 billion over the past year, growing by 48% from $83 billion in May 2024 to $123 billion in May 2025. BTC options volume on CEXs almost doubled from the value a year ago. However, the options volume on decentralised exchanges (DEXs) dropped by 50% in the past 12 months.
• Crypto options on TradFi exchanges also saw strong growth. Chicago Mercantile Exchange (CME)’s options on BTC and ETH futures monthly trading volume increased by 19% in the last 12 months, reaching more than $5 billion in May 2025. Cboe’s Bitcoin US ETF Index (CBTX) and Mini Bitcoin US ETF Index (MBTX) options’ monthly trading volume surged by 188% year-to-date, respectively, reaching a combined $1.8 billion in May 2025.
• The complicated nature of options trading has limited the growth of the crypto options market. Crypto.com offers user-friendly, intuitive crypto options products like UpDown Options, Strike Options, and Dual Invest  to broaden market participation and reduce entry barriers. 
• The growth of crypto options is constrained by their complex nature and high liquidity requirements for constructing strategies, making them less accessible than spot or perpetual futures for directional trading. Despite these challenges, options are valuable for hedging, and we anticipate the market will continue to grow, driven by institutional adoption and innovative products that leverage options’ complex strategies, while providing user-friendly experiences.

1. Introduction

Options are a type of derivatives in the financial market that give the holder the right, but not the obligation, to buy or sell a specific underlying asset at a set price (referred to as the strike price) up until a set expiry date. Crypto options are similar to the TradFi ones, with the underlying assets as crypto or crypto-related contracts.

Options Classification

There are different classifications based on different features:

Typical Option Strategies

In terms of option strategies, call options and put options give the holder the right, but not the obligation, to buy or sell an asset at a fixed price, respectively. Both can be entered into as a long or short position.

Perks and Pitfalls of Trading Options 

Options are used for:

• Hedging: Allows holders to control the risk of the portfolio or other existing positions. For example, a spot long BTC position can be hedged with a long put option, which allows the holder to sell the asset at a specific strike price.
• Alternative investment tools: These provide exposure to different market outcomes, where different option strategies can be constructed, which can lead to potential profits in all market movements (e.g., when price increases, decreases, or has high volatility).
• Leveraged exposure to price movements: Allows holders to speculate on price changes with a relatively small cost (the premium); both gains and losses will be amplified due to leverage.
• Source of income: Short options can generate income from premiums, although there are also risks associated.

However, there are also certain pitfalls associated with trading options.

• Complexity: Options involve multiple considerations, including the strike price, implied volatility, premium, expiration date, etc., which are more complex than spot trading. Additionally, there are various strategies that can be considered.
• Potentially larger risks: Shorting options can lead to scenarios with unlimited downside risks. For example, if the holder sells a call option without owning the underlying asset, and the price surges, they would theoretically be exposed to unlimited risks and owe the buyer (of the call option) the asset (which would be at a much higher price).

2. Crypto Options

2.1 Overview

There are three main types of crypto options in terms of the underlying contract:

Compared to the crypto spot and futures markets, with $62 billion and $188 billion average daily trading volume in the past 12 months, respectively, crypto options represent a small but growing market. Average daily trading volume of crypto options globally was ~$3 billion in the past 12 months. The monthly volume grew by 47% from May 2024 to May 2025.

2.2 Options on Crypto Exchanges

Centralised exchanges dominate the crypto options trading volume, with an average monthly trading volume of $97 billion in the past 12 months. In contrast, decentralised exchanges’ notional volumes were around $877 million in the same period, according to DefiLlama.

BTC dominated the crypto options market, accounting for over 80% of the global options trading volume.

2.3 Crypto Options in TradFi

TradFi exchange is another major player, which mainly offers options on crypto futures (e.g., CME) and options on crypto ETFs (e.g., BlackRock’s IBIT Options and Cboe Bitcoin US ETF Index Options).

Compared to native crypto options, these options offered by TradFi players generally do not directly track the underlying crypto assets’ spot prices and do not physically deliver any crypto during settlement. However, they open up opportunities for those who prefer to trade on traditionally established exchanges and do not want exposure to the underlying token, which can be a way to attract liquidity from TradFi traders.

CME’s options on BTC and ETH futures had an average monthly trading volume of $5 billion in the past 12 months, which is ~5% of the volume on native crypto exchanges. Additionally, Cboe and Nasdaq both listed options on crypto ETFs, which trade during regulated hours. Cboe’s CBTX and MBTX options had an average monthly trading volume of $1.3 billion year-to-date.

3. Options Trading on Crypto.com

Crypto.com offers three main crypto options products — UpDown Options, Strike Options, and Dual Invest.

Unlike traditional options, which can appear complicated with various pricing models, strategies, and expiries, Crypto.com’s products provide an easy trading experience for users while retaining the main features of options — hedging risks in the crypto market. Combining options with rewards, and other features like capping profits and losses, are also innovative ways to attract various users, depending on their investment needs.

UpDown Options and Strike Options are offered as US CFTC-regulated derivatives products under CDNA (previously known as Nadex).

3.1 UpDown Options

How It Works

An UpDown Option terminates if the underlying asset’s price hits a predetermined ceiling (up) or floor (down) price. If the option expires without hitting the target/stop price, the trader receives a payout or incurs a loss, depending on the price at expiry versus the entry price. If the price hits the target or stop price, then the position is automatically closed.

Hence, traders can limit their profits and losses. When buying an option, the ceiling (target) price is the level that automatically takes profit (maximum profit), while the floor price (stop) is the level that stops losses (maximum loss). When selling an option, the reverse is applicable.

Advantages

UpDown Options provides built-in protection for traders, as profits and losses are capped. It also opens up the use of leverage to potentially increase returns (it also increases losses on the flipside) and serves as a hedge against the direction of traders’ existing positions.

3.2 Strike Options

How It Works

Strike Options presents traders with a ‘yes’ or ‘no’ decision on price movements. For example, suppose a trader is bullish about BTC and decided to buy 10 BTC Strike Options contracts with an expiry of two hours (five-minute and 20-minute options are also available). Assuming the BTC price is $100,000, the strike price is $101,000, and the buy price is $3.50 per contract (with a fixed contract value of $10), the trader would pay $35, excluding fees, for the 10 contracts. If BTC increased to $101,500 within two hours, meaning the trader predicted correctly, the profit would be (10-$3.50)*10 = $65.

Advantages

Unlike traditional options, Strike Options is easier to invest since it’s a ‘yes’ or ‘no’ prediction. Additionally, there is a clearly defined risk and reward, including maximum gains and losses. Traders can also flexibly exit early if market conditions change.

3.3 Dual Invest

In February 2025, Crypto.com launched an innovative feature called Dual Invest, which allows users to deposit one cryptocurrency while receiving returns in the same currency or another, depending on market conditions.

How It Works

In the chart below, we assume a current BTC price of $100,000, and a dual-invest pair of BTC as the deposit token and USDC as the alternate token.

Advantages

Dual Invest offers traders the opportunity to maintain exposure to assets while earning rewards. Traders can also enjoy flexible investment options (customisable target price, various term lengths, etc.) and capture opportunities regardless of market conditions.

4. Outlook 

Relative to the crypto spot and broader derivatives market, development in crypto options remains in the early stages, with a small trading volume and limited product availability. BTC and ETH dominate the product offerings in TradFi, with a gradual expansion to altcoin options within centralised exchanges, including Crypto.com.

The differences in developmental pace can be attributed to the nature of options as an investment tool, as well as a lack of liquidity. Options in mature asset classes (e.g. equities) are commonly used as dynamic hedging instruments with strategies like long call/put spread, straddle, and strangle. These can be complicated to execute and require sufficient liquidity along the different strike prices and expiries. This makes liquidity needs for options exponentially larger than other derivative instruments due to the fragmented nature of the product. On the other hand, if investors want to find an instrument for easy directional trading, spot or perpetual futures trading may be more suitable. 

However, options remain a powerful hedging and speculative tool in trading. On one hand, the market needs more innovative, user-friendly products to bring existing traders on board; on the other hand, attracting TradFi and institutional traders will also boost market liquidity. In the future, there is potential to consider an Automated Market Maker (AMM) design for options, where liquidity across multiple strikes or expiries are combined, which can further improve capital efficiency.

5. Conclusion

The foundational infrastructure for crypto options development is in place, including high speed blockchains with low transaction costs and efficient data feeds that can support options pricing. However, bottlenecks remain — most notably in areas of user experience and liquidity. For many retail users, options can still be a complex investment tool. At the same time, lack of liquidity and product availability can limit development of the crypto options market.

To address these challenges, Crypto.com offers user-friendly, intuitive crypto options products to broaden market participation and reduce entry barriers.

As the broader crypto derivatives market continues to evolve, we expect to see more institutional capital flow in, heightening the role of options as a hedging tool. 

Read the full report: Crypto Options

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Authors

Crypto.com Research and Insights team

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