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How does USDT Margined Option Delivery works?
How does USDT Margined Option Delivery works?
Updated over a week ago

BIT option contracts are European-style options, and buyers and sellers will make cash delivery on the expiration date.

For option contracts that expire, the system takes the average of the index price of underlying asset 30 minutes before expiration as the option delivery price, and determines whether to exercise the option based on the relationship between the strike price and the delivery price of the option.

For ITM options, the platform will help users to exercise the options automatically. For ATM options and OTM options, the platform will automatically void them. Details are as follows.

Option Value

Call Option

Put option

Exercise Result

ITM

Strike price<Delivery price

Strike price > Delivery price

Automatic exercise, seller pays settlement value to buyer.

ATM

Strike price = Delivery price

No exercise

OTM

Strike price > Delivery price

Strike price<Delivery price

No exercise

When the option is exercised, the system will transfer the settlement value from the seller's account to the buyer's account, and release the seller's frozen margin.

USDT -margined option settlement value = (delivery price - strike price) * position size (currency)

Example.

Amy has the following option positions.

Amy holds a long position of BTC-USDT -24JUN22-30000-C that is going to expire, the position size is 0.5 BTC and the delivery price is 40,000 USDT .

As it's a call option and strike price 30,000 < delivery price 40,000, it is an ITM option and will be automatically exercised by the platform.

Settlement value =|(delivery price - strike price) * position size|

= (40,000 - 30,000) * 0.5

= 5000 USDT

Delivery fee

Delivery fee (USDT margined option) = position size * delivery price * fee rate

Delivery fee rate:

0% for daily options

0.015% for all other options (Delivery fee cannot be higher than 12.5% of the option value)

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