How to Trade Options on KuCoin: A Beginner’s Guide

Learn how to trade options on the KuCoin app with this step-by-step guide covering setup, strategies, and key features. Maximize profits with low fees, leverage, and flexible hedging opportunities while managing risks effectively.

Options trading is a type of derivative contract that allows traders to gain exposure to an asset's price movements without directly holding the asset, offering more controlled risks compared to perpetual contracts. KuCoin provides European-style options trading, offering users a simple way to trade cryptocurrency options. With KuCoin Options, you can leverage market fluctuations to hedge risks, or diversify your trading strategies in both rising and falling market conditions. Follow this step-by-step guide to get started with options trading on the KuCoin app.

Crypto options trading involves buying or selling financial derivatives that give traders the right, but not the obligation, to buy or sell an underlying cryptocurrency—such as Bitcoin (BTC) or Ethereum (ETH)—at a predetermined strike price by a specific expiration date. In exchange for this right, the trader pays a premium, which is the upfront cost of the option. These contracts allow participants to speculate on price movements or hedge their positions without owning the actual asset, all while maintaining controlled risks, as the maximum loss is limited to the premium paid for the contract.

There are two main types of options: call options and put options. Each serves a distinct purpose based on the trader’s expectations of the asset’s future price movements.

What Is a Call Option?

Call Option: Buyer PNL Chart

A call option gives the buyer the right to purchase the underlying asset at the strike price on or before the option’s expiration date. Traders use call options when they expect the price of the cryptocurrency to increase.

In exchange for this right, they pay a premium upfront. If the price rises above the strike price, the trader can exercise the option to buy the asset at the lower strike price, profiting from the difference minus the premium.

For example:
You buy a BTC call option with a strike price of 30,000 USDT for a 200 USDT premium. If BTC rises to 32,000 USDT, your profit is 1,800 USDT after deducting the premium. If BTC stays below 30,000 USDT, your loss is limited to the 200 USDT premium.

What Is a Put Option?

Put Option: Buyer PNL Chart

A put option gives the buyer the right, but not the obligation, to sell the asset at the strike price by the expiration date. Traders buy put options when they expect the asset's price to fall. Traders use put options when they expect the asset’s price to fall. The goal is to sell the asset at the higher strike price, even if the market price has dropped, earning a profit from the difference.

Like call options, the buyer pays a premium, which becomes the maximum possible loss if the option expires unexercised. If the asset's price falls below the strike price, the trader can sell it at the higher strike price, earning a profit from the difference.

For example:
You purchase an ETH put option with a strike price of 2,000 USDT for a 50 USDT premium. If ETH falls to 1,800 USDT, you earn 150 USDT profit minus the premium. If ETH stays above 2,000 USDT, your loss is capped at 50 USDT premium.

KuCoin offers European-style options, which means these contracts can only be exercised on the expiration date. This feature enables users to lock in profits or limit losses before the option reaches maturity, giving traders enhanced control over their strategies. With a straightforward interface and support for BTC and ETH options, KuCoin provides a robust platform for both speculative trading and hedging.

How KuCoin Options Work

When trading options on KuCoin, users can choose between call options and put options:

Call Option (C): A bullish contract giving the buyer the right to buy the asset at a specific strike price upon expiration.
Put Option (P): A bearish contract allowing the buyer to sell the asset at a predetermined strike price, profiting from price declines.

Supported Assets and Contract Details

KuCoin supports options trading for BTC and ETH, with all contracts settled in USDT. The minimum order size is 10 USDT or 0.01 option units, making it accessible to both new and experienced traders. Each contract includes an expiration date, such as BTC-241205-75000-C, which expires on December 5, 2024. Options are settled automatically at 08:00 (UTC) on the expiration date, based on the time-weighted average price of the asset between 07:30 and 08:00 (UTC).

Key Fees and Pricing Details

KuCoin offers competitive fees to help traders manage costs and maximize profits. A trading fee of 0.03% applies to the transaction value, while the exercise fee is 0.02% of the settlement price or 10% of the profit, whichever is lower. The premium, which is the upfront cost of purchasing an option, represents the maximum potential loss if the option expires out of the money. KuCoin uses the Black-Scholes model to calculate the mark price, ensuring fair value and transparency in pricing.

Now that you have a basic understanding of how options trading works, let’s take a look at an easy step-by-step guide on how to use the options trading feature on your KuCoin mobile app.

Step 1: Enable Your Options Trading Account

Access the Options Page: Go to the Options Trading section from the product menu on the KuCoin app’s homepage.
Complete the Quiz and Agreement: Take the Options Knowledge Quiz and agree to the Options User Agreement to activate your options account.
Transfer Funds: Transfer USDT to your Options Account via Assets → Options Account → Transfer. You can also transfer funds from other accounts during the order process.

Step 2: Place Orders and Open Positions

Select Your Option Contract: Choose a trading pair like BTC/USDT or ETH/USDT. Predict whether the price will rise or fall and select the expiration date that matches your strategy. KuCoin will display suitable call (C) or put (P) options.
Fund the Trade: Ensure that your options account has enough USDT for the premium payment. Transfer funds if necessary.
Place Your Order: To place your order, enter the quantity of option contracts you wish to purchase. Review the breakeven chart to evaluate potential profit and loss. Finally, tap Place Order to confirm your trade.

Step 3: Manage and Close Positions

Monitor Open Positions: Check your active positions, past orders, and exercise history on the Options Homepage.
Close Positions Early: If the market changes, close your option early to secure profits or reduce losses.
Automatic Exercise at Expiration: Unexercised options will freeze at 07:00 (UTC) on the expiration date and automatically settle. The settlement price is calculated using the time-weighted average between 07:30 and 08:00 (UTC).

KuCoin’s options trading platform offers a flexible, low-risk way to profit from market movements, with your risk limited to the premium paid. Here’s why KuCoin stands out:

High Profit Potential with Low Risk: Options let you amplify profits with a small premium instead of buying the full asset. Plus, your maximum loss is capped at the premium, with no risk of liquidation.
Hedge & Protect Your Portfolio: Use put options to hedge against potential losses in your spot holdings. If BTC’s price drops, profits from the put option offset declines in your portfolio.
Arbitrage Profits with Low-Risk Gains: Exploit price differences or market volatility. For example, buy a spot asset and simultaneously purchase a put option to profit if the price falls. Alternatively, use call options alongside futures to take advantage of volatility trends and capitalize on arbitrage opportunities.

KuCoin’s options trading offers a flexible way to profit from market volatility with controlled risks. Whether you're a beginner looking to learn or an experienced trader seeking hedging strategies, the KuCoin app provides the tools needed to succeed. With low capital requirements, high leverage, and diverse strategies, KuCoin Options helps you optimize your trading performance.

1. What trading pairs are available for KuCoin options?

KuCoin currently supports options contracts for BTC/USDT and ETH/USDT. These popular pairs offer high liquidity and volatility, making them ideal for both speculative trading and hedging strategies. More trading pairs may be added in the future to provide greater flexibility for users.

2. Can I close my option before expiration?

Yes, you can close your options position at any time before the expiration date to secure profits or reduce losses. While KuCoin offers European-style options—which can only be exercised on the expiration date—you don’t have to wait until then. KuCoin allows you to exit trades early if market conditions change, giving you more control over your strategy and making it easier to manage risks effectively.

3. How is the settlement price calculated?

The settlement price is determined by taking the time-weighted average of the underlying asset’s price between 07:30 and 08:00 (UTC) on the expiration date. This method ensures a fair representation of the asset’s value during the final moments of trading, reducing the impact of short-term volatility.

4. What happens if I don’t close my position before expiration?

If you don’t close your position before the 07:00 (UTC) cutoff on the expiration date, the option will be frozen and automatically exercised if it is profitable. The final profit or loss will be settled in USDT based on the settlement price, and the results will be available under the Exercise History tab.

5. What are fees for trading or exercising options?

Yes, KuCoin charges a 0.03% trading fee on the transaction value and a 0.02% exercise fee on the settled amount at expiration. However, during promotional periods, KuCoin may waive these fees or offer additional rewards to users, making it a great opportunity to trade without incurring costs.

6. What is the minimum amount required to trade options on KuCoin?

The minimum trade size for KuCoin options is 10 USDT worth of contracts or 0.01 option units. This low entry barrier allows both beginner and experienced traders to participate in options trading with minimal capital, reducing overall risk exposure.

7. What is the difference between call and put options?

A call option gives the buyer the right to purchase the underlying asset at the strike price, making it suitable for bullish market predictions. In contrast, a put option allows the buyer to sell the asset at the strike price, helping traders profit from bearish market movements or hedge against potential losses.

8. How do I top up my options trading account?

To top up your KuCoin options trading account, open the KuCoin app and log in to your account. Navigate to Assets → Options Account → Transfer, where you can select the amount of USDT to transfer from your Funding Account or Trading Account. Enter the desired amount and click Confirm to complete the transaction. You can also transfer funds directly from the options order page before placing a trade. KuCoin offers fee-free transfers between accounts, ensuring quick and seamless access to funds for trading.