Introduction into Bitwell Option Contracts

Bitwell is a digital asset derivative service platform. It is founded by senior practitioners from leading Internet companies such as Tencent and Sina, as well as world-renowned financial institutions such as Morgan Stanley and Paypal.

Bitwell is committed to building a fair and transparent global digital asset trading platform, providing investors with secure, convenient and intelligent blockchain derivatives trading services.

Bitwell option contract will be officially rolled out for public beta on April 6, 2020. After the test is completed and functions are further optimized, it will be officially launched.

The following is an introduction to options contract products:

1.Basic Concepts:

Underlying: The set asset for future transactions. The price of an option contract (premium) changes as the underlying asset changes. The range of underlying assets is wide. Prices of spot, prices of index, or even prices of futures, all can be used as underlying. The first option rolled out by Bitwell is based on the BTC index as the underlying asset.

Expiration Date: After expiry, the option becomes invalid and no longer trades. When the transaction ends, the exchange will settle open positions.

Exercise Price: The price at which an option contract buyer can buy (the call option) or sell (the put option) of the underlying asset.

Contract type: There are different types according to different standards. For example, from the perspective of exercise methods, it can be divided into European (the buyer can only exercise on expiration date), and American (the buyer can exercise on any day before the contract expires). The first option Bitwell rolls out is European, which means, the option will be exercised only on the day of expiration. But automatic exercise will be performed for the user who does not need to submit an exercise application.

Option fee: Also known as the premium—the price at which two counterparties trade when buying or selling an option contract.

2.Specifications of Bitwell Option Contracts:

FeatureDetail
UnderlyingBTC Index: the volume-weighted average price of BTC/USDT on five major exchanges. The exchanges will be revaluated regularly, and the result will be announced in advance.
Naming ruleUnderlying-expiry-strike-contract type, for example: BTCUSDT-0930-7500-P, refers to Put options with strike price of 7500 and expiration date 09/30 with respect to BTCUSDT index. P stands for Put, C stands for Call.
Contract TypeEuropean
Contract Multiplier0.1 BTC, which means one option stands for 0.1 BTC
Quotation & Settlement CoinUSDT
Expiration DateBitwell offers Option Contracts with 2 different expiration dates, which are weekly, and bi-weekly.
Strike Price and IntervalsThe exchange will set a reasonable strike price, which will be adjusted according to different market conditions.
SettlementCash Settled in USDT spread. After the expiration, open positions will be automatically settled.
Expiry Time17:00 (UTC), Friday of the expiry week
Trading Hours24/7
Tick Size0.01 USDT
Opening positionBuy to open, sell to open, Covered Call, Selling Puts on Margin
Option Pricing ModelBlack–Scholes model

Attachment: BitWell Option Commissions (in U)

Option Commission = min[
discounted commission rate x par value per option x number of filled cont,
deal price x number of filled cont x 10%
]

That is, the option commission will not exceed 10% of the transaction price (i.e., premium).



BitWell is committed to building a fair and transparent global digital asset trading platform, providing investors with secure, convenient and intelligent blockchain derivatives trading services.

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