Understanding USDC options trading can significantly enhance your ability to manage risk and capitalize on market movements. Whether you're new to derivatives or looking to refine your strategy, this guide breaks down essential concepts, platform-specific rules, and practical tips for trading USDC-denominated options effectively.
What Are USDC Options?
USDC options are financial derivatives that allow traders to speculate on or hedge against price movements of underlying assets—such as Bitcoin (BTC) or Ethereum (ETH)—using a stablecoin (USDC) for settlement. These instruments provide flexibility, limited risk (for buyers), and leverage, making them popular among both retail and institutional traders.
Options come in two primary types:
- Call Options: Give the holder the right—but not the obligation—to buy the underlying asset at a predetermined price (strike price) on or before expiration.
- Put Options: Grant the right to sell the underlying asset at the strike price by expiration.
Unlike futures, which require contract fulfillment, options offer strategic choice: exercise only when beneficial.
👉 Discover how advanced traders use USDC options to maximize returns with minimal capital
Key Differences Between Options and Futures
While both options and futures are derivative instruments used for speculation and hedging, their obligations differ fundamentally:
- Options: Buyers pay a premium for the right to exercise; they are not obligated to act.
- Futures: Both parties are required to fulfill the contract upon expiry, regardless of market conditions.
This makes options particularly attractive for risk management, as losses for buyers are capped at the premium paid.
Types of Option Contracts Available
Traders can access various expiration cycles tailored to different strategies:
- Daily, next-day, and 3-day contracts for short-term plays
- Weekly, bi-weekly, and 3-week contracts for medium-term positioning
- Monthly and quarterly expiries for long-term hedging or directional bets
New contracts typically go live:
- Daily at 08:00 UTC for 3-day expiries (rolling daily)
- Every Thursday at 08:00 UTC for weekly, monthly, and quarterly options
When multiple expiries coincide (e.g., monthly and 3-week), the platform automatically adjusts listings to maintain clarity and avoid overlap.
Trading Fees and Cost Structure
Three main fees apply to USDC options trading:
- Trading Fee: Charged on executed orders.
- Delivery Fee: Applied upon exercise or expiry.
- Liquidation Fee: Incurred if positions are forcibly closed due to insufficient margin.
These costs are transparently calculated and deducted from your account balance. Always review fee schedules to optimize trade execution.
Order and Position Limits
To ensure market stability and fair access, exchanges impose order size caps:
- BTC Options: Minimum 0.01 BTC | Maximum per order: 100 BTC
- ETH Options: Minimum 0.1 ETH | Maximum per order: 1,500 ETH
Maximum open positions:
- Up to 1,000 BTC across all BTC option contracts
- Up to 10,000 ETH for ETH-based options
Note: Institutional clients may qualify for higher limits through dedicated support channels.
Understanding Mark Price in Options
The mark price serves as a fair-value estimate for each option contract. It’s derived using:
- Implied Volatility (IV) curves based on real-time bid/ask data
- The Black-Scholes pricing model, incorporating IV, spot price, strike, time to expiry, and risk-free rate
While the mark price isn’t the actual buy/sell price, it helps traders assess whether market quotes are overvalued or undervalued. Significant deviations between bid/ask prices and the mark price may signal mispricing opportunities—or increased risk.
Importantly, exercise value is determined by actual market prices, not the mark price.
Price Bands and Order Restrictions
To prevent erroneous trades and manipulation, platforms enforce dynamic price limits:
For BTC Options:
- Minimum sell price:
Max(5, Mark Price − 0.01 × Index Price × Max[1, 4 × |Delta|]) - Maximum buy price:
Mark Price + 0.05 × Index Price × Max[1, 4 × |Delta|]
For ETH Options:
- Minimum sell price:
Max(0.1, Mark Price − 0.01 × Index Price × Max[1, 4 × |Delta|]) - Maximum buy price: Same formula as BTC
These bounds adjust based on volatility (via Delta) and index levels, ensuring orders remain within reasonable ranges.
ATM, ITM, and OTM: Understanding Moneyness
An option's value depends on its relationship between the current market price (spot) and strike price:
| Option Type | In-the-Money (ITM) | At-the-Money (ATM) | Out-of-the-Money (OTM) |
|---|---|---|---|
| Call | Spot > Strike | Spot ≈ Strike | Spot < Strike |
| Put | Spot < Strike | Spot ≈ Strike | Spot > Strike |
ITM options have intrinsic value; OTM options rely solely on time and volatility premium.
👉 Learn how professional traders identify high-probability ITM opportunities before expiration
Margin Modes: Regular vs. Portfolio Margining
You can switch between Regular Margin and Portfolio Margining, subject to conditions:
- Zero open positions
- No active or conditional orders
- Account equity ≥ 1,000 USDC (for portfolio mode)
Which Mode Offers Lower Margin Requirements?
It depends on portfolio composition:
- With hedged positions (e.g., long calls + short puts): Portfolio margining reduces required initial margin.
- With directional exposure (all long or all short): Regular margin may be more efficient.
This reflects differing risk assessment models—portfolio mode evaluates net risk across instruments, while regular margin treats each position independently.
Funding Your USDC Account
Transferring funds is simple:
- Log into your USDC derivatives account.
- Click “Transfer In” to move USDC from your spot wallet.
If you hold USDT:
- Convert USDT to USDC instantly at market rates within the platform
- Or trade USDT/USDC on the spot market first
No external conversions needed—everything happens seamlessly inside your account.
👉 See how fast deposits can boost your option trading performance
Risk Warnings and Notifications
Stay informed with automated alerts:
- IM Utilization > 90%: Warning email sent once every 24 hours
- IM > 100%: Orders increasing position size are canceled; notification every 12 hours max
- MM Utilization > 70%: Margin call alert—deposit more USDC to avoid liquidation (every 15 minutes max)
⚠️ Important: These alerts are supplementary. Relying solely on notifications may result in unexpected liquidations during volatile markets.
Managing Risk with Sub-Accounts
Use sub-accounts to isolate strategies or delegate access:
- Profit/loss calculations are independent from the main account
- Fund transfers between master and sub-accounts occur via the spot wallet
Ideal for teams, fund managers, or traders running multiple strategies simultaneously.
Frequently Asked Questions (FAQ)
Q: Can I trade USDC options without holding USDC upfront?
A: No. All USDC-denominated derivatives require sufficient USDC in your futures wallet before placing orders.
Q: How is the settlement price determined?
A: Settlement uses a time-weighted average price (TWAP) of the underlying asset near expiry to prevent manipulation.
Q: Are options automatically exercised at expiry?
A: Yes. In-the-money options are automatically exercised if they exceed a minimal threshold (e.g., 0.01 BTC equivalent).
Q: What happens if my margin falls below maintenance level?
A: You’ll receive a margin call. If not addressed, your position will be partially or fully liquidated.
Q: Can I close my option position before expiry?
A: Absolutely. Most traders exit positions early to capture profits or cut losses rather than waiting for settlement.
Q: Is historical volatility used in pricing models?
A: Only implied volatility (from market bids/offers) is used. Historical data informs traders but doesn’t affect official mark pricing.
By mastering these fundamentals—from moneyness and margining to risk alerts and execution limits—you’ll be better equipped to navigate the dynamic world of USDC options trading with confidence and precision.