BitOffer Research Institute: plenty of Bitcoin Options settling, how a hedge works?

3 min readMar 30, 2021


March 26th, Friday of this week, there will be a large Bitcoin Option in a settlement. BitOffer, majored in the American Option, now the open interests of ETH options surpassed $8 billion. However, the Deribit, majored in European Option, nowadays launched on Twitter that the open interests of current BTC Option are $12 billion. The open interests of ETH Option surpassed $27 billion. At the same time, the open interests of the total value of the Bitcoin Option will be in maturity on March 26th.

It worth paying attention to that large of the Options Settlements will directly influence the market trend. Before and after the option settlements, the market usually has rapid fluctuations. The principle of settlements is very simple. Now the Bitcoin Option Settlement is divided into 2 ways, that one is the cash settlement, the other is the object settlement.

Cash settlement, that is the settlement when the option was expired. If it is the actual at-the-money options. The profits will be directly settled in cash like USDT or dollars to the investors. After the investors get the cash, they will continue to buy the increasing or declining option, which has little influence on the currency price.

Spot settlement, that is the settlement when the option was expired. If it is the actual at-the-money options. The profits will be directly settled in objects like BTC or ETH to the investors. At this time, investors get the Bitcoin or Ethereum and other currencies spot. But before and after the option delivery, it is often the high point of the currency price. Therefore, most of the investors will select to sell out the spot to switch back to stable currencies such as USDT. Because of this, the market will be under huge selling resistance, which will cause the price to fall.

BitOffer, the largest Bitcoin American Option exchange in the world, uses the cash settlement so that investors can use USDT to buy the increasing or declining option. It also gains USDT about the maturity settlement. Therefore, in BitOffer, investors don’t need to care about the currency price fluctuations before and after delivery. The American options are more humane.

While it refers to the European Option like Deribit、Bakkt、CME、OKEX and etc, it was generally for physical delivery and settlement. Investors concern more about the price fluctuation before and after a large number of options. Those who don’t attend in the option may suffer from this investment trouble. So how to avoid the risks brought by the violent market fluctuations before and after the option settlement.

Lucian, Bitoffer’s chief analyst, in an interview, had mentioned that whether it is options or futures, the maturity delivery will cause corresponding fluctuations in the market. Generally in this situation, it is recommended to deploy fixed-income wealth management products through the corresponding cycle.

For example, the 7-Days Saving and quantitative fund put forward in Bitoffer has an annual income of 20%. Both of them are principal-guaranteed risk-free financial products. They can earn profits and make it compoundable. It is the wealth management artifact that is very suitable for most investors.

Don’t ignore the annual profits of 20%. Most of the famous investors like Buffett also owns 20% of the annual profits. According to the data shows, after the third halving of Bitcoin, the price soared all the way by nearly 10 times, but only 25% of investors realized profits. Most of the investors still are in a state of loss. For these investors, they can invest the quantitative fund and 7-days saving to earn 20% profits at least and it is enough to beat inflation.

The calculation of the 7-days saving profits:

For example, if you invest $10,000 USDT, you get a fixed 40USDT every week. There are 52 weeks in a year. Subscribing every week will generate compound interest. After one year you finally gain 2100 USDT and the equivalent rate of return is 21% risk-free annualized.