BIT launches options market for Cardano’s ADA token.

On Wednesday, BIT, a cryptocurrency derivatives exchange, introduced options linked to Cardano’s ADA token and announced plans to add more alternative cryptocurrencies (altcoins) in the coming months.

The ADA options are now available on the platform and are denominated and settled in U.S. dollars. BIT’s spokesperson confirmed that one ADA options contract represents 1 ADA.

ADA, the native token of Cardano, a competitor to Ethereum, has a market value of $9.73 billion and is currently the world’s eighth-largest cryptocurrency. Alternative cryptocurrencies tend to be more volatile than the market leaders, bitcoin (BTC) and ether (ETH).

Options are derivative contracts that give the buyer the right to buy or sell an underlying asset at a certain price on or before a specific date. A call option gives the right to buy the asset, while a put option gives the right to sell.

With the availability of ADA options, traders can now use options to hedge their portfolio risks or bet on a volatility explosion, as they have been doing with bitcoin and ether options.

BIT’s unified margin system enables traders to use their coin holdings as collateral to trade ADA options at a discount. “BIT’s unified margin system allows users to utilize all assets in their accounts as trading collateral with a haircut ratio. ADA’s haircut ratio is now 15%, meaning users can use their ADA as collateral and trade options at a 15% discount,” BIT said in the press release.

The offering was launched in collaboration with strategic partner Darley Technologies and market maker DWF Labs, and expands BIT’s existing suite of options, which includes those tied to the decentralized layer 1 blockchain, The Open Network’s TON coin, and bitcoin and ether futures and options.

BIT plans to offer options on other altcoins, including meme coins, in the future. The global crypto options market, led by Panama-based Deribit exchange, is already worth billions of dollars, with most of the activity concentrated in bitcoin and ether contracts, and is known to influence the spot prices of the top cryptocurrencies.

Edited by Sheldon Reback.