Square options, trading structured products in a spot manner — The visualization of financial innovation in the cryptocurrency field
In the rapidly developing cryptocurrency field, financial innovations are constantly emerging, providing investors with a diverse range of tools and opportunities. The BIT exchange, in collaboration with VETA Finance, has recently launched an innovative product—square options—that allows users to trade structured products through spot buying and selling, greatly simplifying the trading process and offering users an unprecedented convenient experience. This innovative move not only provides investors with opportunities for high-leverage returns but also further promotes the development of the cryptocurrency financial market.1. Financial Innovation in the Cryptocurrency Field
In recent years, the cryptocurrency market has experienced explosive growth. With the popularity of mainstream cryptocurrencies like Bitcoin and Ethereum, the demand for new financial products in the market continues to rise. Investors are looking for more efficient and convenient ways to participate in the market and achieve higher returns. Against this backdrop, major exchanges and fintech companies have launched various innovative products in an attempt to meet investor needs.
As a leading cryptocurrency trading platform, BIT Exchange has been committed to providing users with cutting-edge trading tools and products. In addition to derivatives such as contracts and options similar to those in traditional finance, as well as structured financial products like dual-currency wealth management and shark fin products, the latest attempt under this concept is the square options launched in collaboration with VETA Finance, which is another manifestation of financial innovation in the cryptocurrency field.
2. What are Square Options?
Square options are a financial instrument designed as spot tokens, allowing investors to gain exponential returns by investing in the price movements of Bitcoin or Ethereum when the market moves in the direction of their investment.
Specifically, the square options on BIT are divided into four types:
BTC²UP: Generates exponential returns when the price of Bitcoin rises
BTC²DOWN: Generates exponential returns when the price of Bitcoin falls
ETH²UP: Generates exponential returns when the price of Ethereum rises
ETH²DOWN: Generates exponential returns when the price of Ethereum falls
Through this design, investors can choose the corresponding square option product based on their judgment of market trends, maximizing returns under different market conditions.
3. The Operating Mechanism of Square Options
The operating mechanism of square options is relatively simple, aiming to provide users with a convenient trading experience. Users can easily purchase square options on BIT's Spot Plus market, just like buying spot cryptocurrencies. This design significantly reduces the complexity of trading, making it easy for users without extensive investment experience to get started.
Square option tokens are packaged as European options. Holders can exercise their options on the expiration date or trade them before expiration. Similar to conventional European options, square options are mainly influenced by factors such as the price of the underlying asset, volatility, and expiration time.
- Non-linear Return Structure
Square options adopt a non-linear return structure, meaning that when the price of the underlying asset changes, the returns of the options do not increase linearly but grow exponentially. This characteristic allows investors' returns to be rapidly amplified when market conditions are favorable.
- No Liquidation Risk
Compared to traditional high-leverage trading, square options carry no liquidation risk. Investors do not need to worry about forced liquidation due to market fluctuations, allowing for a more secure investment experience.
- Easy Trading
The trading process for square options is very straightforward. Users simply need to select a call or put option product on the BIT exchange and then purchase based on their judgment. The entire process is similar to buying spot cryptocurrencies, greatly lowering the trading threshold.
- Monthly Expiration Mechanism
Square options are monthly tokens, with expiration dates on the last Friday of each month, consistent with the trading times of the BIT options market. This design allows investors to better plan and manage their investment strategies.
4. Calculation of Expiration Returns for Square Options
Expiration returns for square options (per token):
As seen from the above formula, due to the different methods of calculating returns for square options compared to ordinary vanilla options, when the market experiences a significant rise, the returns from call square options will be significantly greater than those from ordinary call options, and vice versa.
Comparison of Expiration Returns between Square Options and Ordinary Options
5. Case Study Analysis
On May 21, the Bitcoin (BTC) and Ethereum (ETH) markets suddenly experienced a significant rise. BTC broke through $70,000, with an increase of 6%; ETH surged by 14.5%, reaching $3,518. This was mainly attributed to investor enthusiasm for spot ETFs and a broad market rebound.
Case 1: Short-term High Returns
Assuming you purchased a call square option for ETH with a strike price of $4,100 that expires on May 31, with the latest price at $17.08 and a 24-hour increase of 972.25%. If an investor bought this option last night for $1.58, they could sell it today for $17.08, achieving a return close to 10 times. This case demonstrates the potential for high returns from square options in the short term.
Case 2: Long-term Exponential Growth
Assuming you purchased a call square option for ETH with a strike price of $3,400 that expires on June 28, with the latest price at $135.81 and a 24-hour increase of 300.33%. This option has already surpassed the strike price, meaning that every time the ETH price rises further, the returns will grow exponentially. This case showcases the exponential growth potential of square options in long-term investments.
Return Chart for BIT Spot Plus Square Option Tokens on May 21
6. Comparison of Square Options with Other Financial Products
- Perpetual Contracts
While perpetual contracts offer high leverage, they are prone to liquidation during high volatility; square options, on the other hand, carry no liquidation risk, making them more suitable for investors seeking stable returns.
- Altcoins
Although altcoins can provide high returns, they come with extremely high risks and are susceptible to market manipulation; square options offer a more stable and reliable path to high returns.
- Traditional Options
Traditional options are complex and require a high level of expertise; square options are designed to be simple, making them accessible to a broader range of investors. This characteristic enhances the acceptance of square options among a wide investor base.
7. BIT Square Options Purchase Guide
Purchasing square options on BIT is also very straightforward. Click the "Market" button on the BIT App homepage, select "Spot Plus," and you can choose the cryptocurrency, direction, and expiration date, then enter the price and quantity to make a purchase.
Note: Square options are only supported on the BIT App. Please click the BIT App++ download link++ to purchase.
Conclusion
The collaboration between BIT Exchange and VETA Finance not only reflects innovation in fintech but also brings new investment ideas and tools to the cryptocurrency market.
Through square options, investors can participate in the market in a simpler and more convenient way, maximizing returns. This innovative product not only promotes financial innovation in the cryptocurrency field but also brings new opportunities to investors. Regardless of market fluctuations, investors can achieve exponential returns through square options.
About BIT
BIT (BIT.com) is a comprehensive cryptocurrency exchange designed for professional trading users, supporting advanced risk management and enhancing capital efficiency through its portfolio margin and unified margin features. BIT was established in August 2020 and is a sibling company of the well-known crypto financial services company Matrixport.
About VETA Finance
++VETA Finance++ is the world's first on-chain platform supporting margin trading of structured products, covering the entire service chain of decentralized financial platforms, including structured product pricing and operations for exchanges and other platforms.
