Frequently Asked Questions (FAQ) about Square Options Tokens
1. What are the main token specifications for Square Options Tokens?
BIT currently offers four Square Options Tokens with the following specifications:
Token Name | Underlying | Multiplier | Direction |
BTC²UP | BTCUSDT Index | 0.01 | Bullish |
BTC²DOWN | BTCUSDT Index | 0.01 | Bearish |
ETH²UP | ETHUSDT Index | 0.1 | Bullish |
ETH²DOWN | ETHUSDT Index | 0.1 | Bearish |
Similar to conventional vanilla options, each Square Options Token has its expiration date and strike price, which you can view on the token trading page. These parameters will affect the expiration profit of holding Square Options Tokens. Please refer to the Square Options Token expiration profit calculation rules for details.
2. Are Square Options Tokens cryptocurrencies?
Square Options Tokens are not cryptocurrencies. They are financial derivatives designed as spot tokens, allowing investors to participate in the options market in a manner similar to spot trading. Square Options Tokens combine the simplicity of spot trading with the leverage characteristics of options products. They provide returns based on the price movements of underlying assets, similar to traditional European vanilla options, but with a different method of calculating expiration profits compared to common vanilla options. The token characteristics of Square Options Tokens are limited to trading similar to other tokens in the spot market. Therefore, kindly note that Square options Tokens are not cryptocurrencies.
3. Do Square Options Tokens support deposits and withdrawals?
As mentioned above, Square Options Tokens are financial derivatives, not cryptocurrencies. Therefore, they do not support deposits, withdrawals, or transfers.
4. How can I trade and view Square Options Tokens?
You can trade Square Options Tokens in the spot plus section of the BIT exchange, using the same trading methods as other spot products on BIT. BIT spot currently supports limit orders (GTC) and market orders (IOC). After purchasing Square Options Tokens, you can view details of the tokens you purchased in your assets and obtain information such as cumulative redemption amounts for a certain type of token (e.g., BTC²UP).
5. How are Square Options Tokens priced?
Square Options Tokens are priced according to a nonlinear model, similar to vanilla options. The price of Square Options Tokens is mainly influenced by factors such as the price of the underlying asset, volatility, and expiration date.
Token Price | Bullish Token | Bearish Token |
Underlying Price ↑ | ↑ | ↓ |
Underlying Volatility ↑ | ↑ | ↑ |
Time to expiration ↓ | ↓ | ↓ |
The closer the price of the underlying asset is to the strike price, the more sensitive the option price is to changes in these factors. Holding everything else constant, as the expiration date approaches, the rate of decay in option value accelerates.
6. Are there margin requirements for Square Options Tokens?
Square Options are designed for spot trading, so they do not require traditional margin. However, investors need to bear the full cost of purchasing the tokens themselves.
7. How is the expiration profit of Square Options Tokens calculated?
Please refer to the Square Options Token expiration profit calculation rules.
8. What are the expiration date, last trading time, and settlement time of Square Options Tokens?
Square Options Tokens are designed to expire on the last Friday of each month, with the last trading time at 8:00 UTC on the expiration date. Please note that, similar to traditional vanilla options, liquidity for Square Options Tokens gradually decreases as the expiration date approaches.
BIT will begin settlement of Square Options Tokens around 9:00 UTC on the expiration date. If you hold tokens that generate USDT returns after expiration (i.e., the option is in-the-money), the system will automatically calculate the return amount and transfer it to your unified account around this time. At the same time, the system will reset the balance of your expired tokens to zero.
9. What are the main risks of Square Options Tokens?
Market Risk: Square Options Tokens are highly sensitive to market fluctuations, and their nonlinear nature can lead to rapid declines in value. The total return received by customers may be significantly lower than the market value of their investment.
Leverage Risk: Due to their nonlinear nature, the value of Square Options Tokens may accelerate when the price of the underlying asset rises, and decrease when the price of the underlying asset falls. In adverse market conditions, investors may lose their entire investment.
Liquidity Risk: While customers can sell Square Options Tokens before expiration, market makers may not provide ideal liquidity under extreme market conditions. Therefore, BIT does not guarantee that the tokens can be successfully sold, or sold at the desired price.
Market Maker Risk: BIT collaborates with market makers to provide liquidity for Square Options Tokens and strictly monitors their accounts. However, market makers may still face risks such as account liquidation in extreme market conditions. In the event of insolvency of a market maker where their assets do not cover their liabilities, users may face early redemption and settlement of Square Options Tokens. The redemption amount received by users depends on the remaining assets in the market maker's account.