BIT exchange introduced XRP-linked options on its cryptocurrency derivatives platform on Thursday, August 17. This initiative will allow users to engage in XRP options trading without the need for cryptocurrency ownership, according to a statement from BIT.
Profit and loss settlement will occur in USD, with OrBit Markets responsible for order book liquidity, the Exchange said, adding that this latest addition augments BIT’s array of options, which encompass Bitcoin (BTC), Ether (ETH), Cardano’s ADA, Toncoin (TON) and Milady Coin (LADYS).
Options represent derivative agreements that bestow the buyer with the privilege to purchase or vend the underlying asset at a predetermined price on or before a specified date. Call options grant the buying right, while put options offer the selling right.
Typically, traders utilize options for hedging purposes, lessening bearish or bullish risks, or generating supplementary earnings by “writing” options alongside their spot market holdings.
Justin Buitendam, BIT’s Global Head of Institutional Sales said in the statement,
“We’re excited to be among the early platforms offering XRP options trading to institutional and retail traders, providing both long and short options trading opportunities.”
With a current market capitalization of $30.88 billion, XRP ranks as the fifth-largest cryptocurrency globally. Similar to other alternative cryptocurrencies, XRP exhibits higher volatility compared to Bitcoin and Ether.
BIT’s choice to introduce XRP options follows closely after a significant legal proceeding. In a much-awaited hearing, a U.S. District Court addressed the U.S. SEC’s case against Ripple Labs for alleged securities law violations related to XRP sales. The court ruled that XRP is not considered a security when traded on centralized exchanges but could be classified as one when directly sold to institutions. This distinction has disrupted the SEC’s effort to generalize all altcoins under a single classification.
Subsequently, numerous exchanges have reinstated XRP’s spot market trading. In a more recent development, the SEC has sought permission to challenge the court’s decision, introducing fresh ambiguity into the market.