How to Trade Bitcoin Options

Options are financial contracts that grant the holder the right—but not the obligation—to buy or sell an asset at a predetermined price (known as the strike price) before a set expiration date. They’re widely used across markets—including stocks, indexes, commodities, and now cryptocurrencies—for hedging risk, generating income, or speculating on price movements.

Learn more about options

In the case of Bitcoin, options typically take two main forms. The first are crypto-native options, which are settled in Bitcoin or stablecoins and trade on platforms like Deribit and CME. These options provide direct exposure to Bitcoin and operate much like traditional options, though they reflect the distinct volatility and trading behavior of the crypto market.

Second, there are equity-based BTC options, such as options on Bitcoin ETFs or trusts (like BITO or GBTC). These are regulated equity options traded on traditional U.S. options exchanges. While they offer indirect exposure to Bitcoin price movements, they are still governed by standard equity options rules and are very popular trading vehicles.

The key difference lies in the underlying asset and trading venue: crypto-native options are tied directly to spot or futures prices of Bitcoin and operate in the 24/7 crypto ecosystem, while equity-based BTC options are tied to listed securities and trade within traditional market hours. Both offer ways to gain leveraged exposure or hedge risk—but they serve different types of investors, depending on access, regulation, and market structure.

If you want to trade Bitcoin options through traditional financial markets—such as options on a Bitcoin ETF like BITO or IBIT—the process is similar to trading regular equity options. You’ll need a brokerage account that supports options trading, approval for the appropriate trading level, and access to U.S. equity markets during standard hours.

Trading crypto-native Bitcoin options, on the other hand, involves a different process. These contracts are settled directly in Bitcoin or stablecoins, trade around the clock, and are available on dedicated crypto derivatives platforms. Below are some steps to help you get started.

Step 1: Choose a trading platform and open an account

At tastytrade, you can gain access to a number of different products that give you Bitcoin exposure. Trade Bitcoin ETFs, Bitcoin futures, and more.

Trade stock, options, futures, and crypto at tastytrade

Step 2: Formulate your market assumption

Before placing a trade, it’s important to clarify your thesis. Are you expecting a sharp move higher in Bitcoin? A period of heightened volatility? For example, if you’re bullish over the next month, you might consider buying a call option to participate in upside while keeping your maximum loss limited to the premium paid. If your view is neutral or bearish, you might explore puts, spreads, or even covered call strategies.

Step 3: Select a contract and place your trade

Browse the available Bitcoin option contracts and choose one that matches your market outlook. You’ll select a strike price and expiration date based on where you think Bitcoin is headed and how long you expect the move to take. For example, if Bitcoin is trading near $90,000 and you expect a rally, you might buy a call option with a $92,000 strike that expires in 30 days. The premium you pay is the cost of the trade—and your maximum possible loss if the market doesn’t move in your favor.

Step 4: Monitor the trade and manage risk

Once your trade is live, track Bitcoin’s price, implied volatility, and the changing value of your option. Most platforms offer real-time profit/loss tracking, and many allow you to place limit orders to exit before expiration. Since crypto-native markets operate 24/7, it’s important to stay alert and adjust as needed—especially during periods of rapid price movement.

Step 5: Close the position or let it expire

You can choose to sell your option early to lock in gains, or to limit losses. If held through expiration and the option expires in the money, it will settle to the underlying asset, and that can be cash or an underlying position depending on the product. If it finishes out of the money, the contract expires worthless and you’re left with the gain/loss from the options position.

Step 6: Review and refine your strategy

After the trade, take time to review your outcome. Did the market move as expected? Was the strike price well chosen? How did volatility affect your premium? Analyzing the trade helps build experience and improves your approach for future setups.

When people talk about Bitcoin options, they’re often referring to two structurally different products: Bitcoin options on futures and crypto-native options. Both offer exposure to Bitcoin’s price, but the key difference lies in the underlying asset.

Learn about Bitcoin futures

A Bitcoin option on futures is a type of option on a futures contract—meaning it gives the holder the right, but not the obligation, to buy or sell a Bitcoin futures contract at a predetermined strike price before expiration. Unlike standard options tied directly to stocks or commodities, these are one step removed from the asset itself, since futures are already agreements to buy or sell Bitcoin at a future date and have expiration dates.

This futures-based structure shapes how the product trades and settles. Bitcoin options on futures are typically cash-settled and traded on regulated platforms like the Chicago Mercantile Exchange (CME). Because they don’t involve direct custody of Bitcoin, they tend to appeal to institutions seeking exposure within a more traditional framework. These are also very large products, as the main Bitcoin futures contract has a notional risk of five Bitcoin.

Mechanically, they resemble standard options—with calls, puts, strike prices, premiums, and expiration dates. But pricing reflects not only spot Bitcoin, but also futures curve dynamics like contango (when futures trade above spot) or backwardation (when they trade below). These factors can add complexity, but can also create opportunities for arbitrage or risk management.

One of the most immediate influences on a Bitcoin option is usually the price of Bitcoin itself. As the market moves closer to or further from the option’s strike price, the option’s intrinsic value adjusts. Implied volatility also plays a key role. When markets expect larger or more unpredictable price swings, premiums for both calls and puts tend to rise, since volatility increases the likelihood of the option finishing in the money.

Other factors include the time left until expiration (more time generally increases value), the option’s moneyness (how close it is to being in or out of the money), and prevailing interest rates or funding costs, which can impact pricing in derivative markets.

For Bitcoin options on futures, the futures curve adds another dimension. Since these contracts are tied to futures rather than spot Bitcoin, pricing can be affected by whether the market is in contango (futures priced above spot) or backwardation (futures priced below spot), shaping how traders assess forward value and risk.

With ETF-based Bitcoin options, pricing may also reflect the ETF’s premium or discount to net asset value (NAV), as well as overall sentiment in equity markets.

Across all formats, Bitcoin options combine standard pricing logic with the realities of the crypto market—rapid shifts in liquidity, elevated volatility, and, in the case of crypto-native options, the added complexity of 24/7 trading. These elements can make crypto options more dynamic—and more sensitive to short-term changes—than their traditional counterparts.