How to trade crypto options

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Learn how to trade crypto options on Paradex in this full step by step walkthrough. This bitcoin options beginner guide will help you get started from no knowledge to a sufficient trader. This live session shows you how to spot better setups, handle different market conditions, and build a stronger options strategy.

In this full crypto options tutorial, we will show you everything you need to know when trading options on Paradex.

Workshop Summary and Key Concepts

- This workshop focused on options as a powerful tool for risk management and expressing nuanced market views.
- Position Sizing: The hosts stressed the principle of Geometric vs. Arithmetic Returns (11:54), highlighting that even with a winning probability, aggressive, large bets can lead to exponential losses due to compounding.
- Options Greeks: Delta was introduced as the key concept, representing an option's dynamic directional exposure and its approximate probability of profit (19:08).
- Straddle Strategy: This volatility-based strategy involves buying both a call and a put at the same strike price, profiting only if the price moves significantly in either direction (25:00). The cost of a straddle can be overlaid on a TA chart to gauge the market's expected move over the option's expiry period (31:14).
- Delta Neutral & Hedging: The Delta Neutral position is only neutral at entry, but its delta shifts as the underlying price moves. To monetize volatility (Long Volatility) or collect premium (Short Volatility), traders must perform dynamic hedging (rebalancing delta) by frequently trading perpetuals to counteract the option's changing delta (50:49).
- Risk Management: Long Volatility (buying options) is safer for beginners, as the max loss is generally limited to the premium paid. Short Volatility (selling options) can generate steady profit (collecting premium/funding) but risks catastrophic losses if a large, unexpected market move occurs (1:03:34). Options can be used as a rechargeable stop-loss for perpetual positions (1:20:50).
- The Paradex Advantage: Hedging costs are minimized on Paradex due to its zero-commission/low-spread RPI (Retail Price Improvement) model, making frequent dynamic hedging significantly cheaper than on traditional platforms (1:10:19).

Timestamps:

00:00 How to trade crypto options
00:56 Workshop Introduction & Educational Goals (Not Financial Advice)
8:05 Workshop Agenda: Strategies, Risk Management, and Practical Trading
9:06 Position Sizing Principle: Geometric vs. Arithmetic Returns
14:32 Paradex Vaults Explained: Automated Copy Trading/Investment Funds
18:19 Introduction to Options Greeks (Delta, Theta, Gamma, Vega)
25:00 Straddle Strategy Explained (Long Volatility: Buying Call and Put)
35:32 Live Demo: Calculating Straddle Price on the ETH Chart
46:52 Delta Neutral Strategy: Hedging an Option with a Perpetual Future
50:49 Delta Neutral: Only Neutral at Entry (Position Dynamically Shifts)
53:42 Implied Volatility (IV) Explained (Gauging Option Price)
58:08 Dynamic Hedging: The Process of Rebalancing Delta as the Price Moves
1:10:19 The Paradex Advantage: Free Hedging (Zero Commissions via RPI)
1:20:50 Options as a Rechargeable Stop-Loss (vs. Perpetual Stop-Loss)
1:24:43 Workshop Conclusion & Final Strategy Review

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