Gate Options Product Overview ｜ Gate

What Are Options?

Options contracts offered by Gate are financial derivatives tailored for cryptocurrencies.
An option is a contract agreed upon by a buyer and a seller.
After the buyer pays the seller a sum (known as the premium), the buyer gains the right to buy or sell a specified amount of the underlying asset from/to the seller at a predetermined price on a specific future date.
The option buyer can choose whether to exercise the option at expiration, while the seller is obligated to cooperate if the buyer decides to exercise.

What Is Simulated Trading?

Simulated trading is a feature on Gate that allows users to trade options contracts using demo funds in a simulated trading environment. The trading interface and operation methods are identical to live trading, and are clearly marked as ‘Simulated Trading’.
Simulated trading does not incur any real costs; the funds used are provided by the platform and are for experience purposes only.

What Does the Option Name Mean?

To simplify communication, options are usually represented by a code in the format: Market-Expiration Date-Strike Price-Type

• Market: The corresponding cryptocurrency market
• Expiration Date: yymmdd; for example, 250627 means June 27, 2025
• Strike Price: The predetermined execution price at expiration
• Type: C stands for Call option, P stands for Put option

For example: An option with the code BTC-250627-18500-C represents a BTC option with an expiration date of 2025/06/27, a strike price of 18,500 USDT, and is a Call option.

Common Terminology

• Underlying Asset: The cryptocurrency asset specified in the options contract
• Premium: The fee paid by the option buyer to the seller to gain the right to exercise the option at expiration

Buying Call/Put Options: Premium = Order Price x ABS(Order Quantity) x Contract Multiplier

• Expiration Date: The last date on which the option can be exercised (for European options, this is the only exercise date)
• Strike Price: The specific price at which the underlying asset is bought or sold at expiration, as agreed in the contract
• Option Type: Includes Call options and Put options

What Are ITM, ATM, and OTM?

In options trading, ITM / ATM / OTM describe the “moneyness” of an option, i.e., the relationship between the current underlying price and the strike price.

• ATM (At The Money) – At-the-money option
• ITM (In The Money) – In-the-money option
• OTM (Out of The Money) – Out-of-the-money option

How Are Value and P&L Calculated?

• Unrealized P&L reflects the floating profit and loss of current positions based on the latest price, which fluctuates with market prices.
  Formula: Unrealized P&L = (Mark Price - Entry Price) × Contract Multiplier × Quantity

• Realized P&L refers to settled portions, including trading fees and profits/losses from manual closing.
  Formula: Realized P&L = Fees + Closing P&L

• Expiration P&L is determined at expiration based on the strike price and market price:
  At-the-money/out-of-the-money options: Not exercised, P&L = 0
  In-the-money options: Automatically exercised

Call P&L = ( Settlement Price - Strike Price ) × Contract Multiplier × Position Quantity - Exercise Fee - Fees
Put P&L = ( Strike Price - Settlement Price ) × Contract Multiplier × Position Quantity - Exercise Fee - Fees

Note: Expiration P&L only calculates the returns from the position itself and does not include the premium paid when buying the option.

All Options on Gate Are Settled in Cash

Cash-settled options mean that at expiration or exercise, the buyer and seller do not physically deliver the underlying asset. Instead, profit and loss are settled in cash based on the difference between the market price and the strike price.
When a cash-settled option contract is exercised, only the difference between the strike price and the current price is credited to the option buyer’s account. Only the cash value of this difference is paid.

At expiration:

• Call Option:
• If Market Price > Strike Price, the buyer receives (Market Price - Strike Price) × Contract Multiplier in cash.
• If Market Price ≤ Strike Price, the option expires worthless and the buyer loses the premium.
• Put Option:
• If Market Price < Strike Price, the buyer receives (Strike Price - Market Price) × Contract Multiplier in cash.
• If Market Price ≥ Strike Price, the option expires worthless and the buyer loses the premium.

What Is Initial Margin?

Initial margin is the minimum amount required to open a position.
Initial margin (opening margin) is the minimum margin a user must pay when opening a short options position. It is used to cover potential risk exposure and is dynamically adjusted based on the underlying price, the degree of out-of-the-money (OTM) of the strike price, and the system’s margin rate settings.

Used to calculate the margin that needs to be frozen when opening a position:
IM = [max(Margin Rate₁ × Underlying Price, Margin Rate₂ × Underlying Price − OTM Amount) + Option Price] × Contract Multiplier
Example:
Selling a BTC call option, underlying price $115,000, strike price $116,000, option price $200
Initial margin ≈ (max(0.1×115,000 , 0.15×115,000−1,000) + 200) × 0.01 = $164.5

What Is Maintenance Margin?

Maintenance margin is the minimum amount required to keep your current position open.
Maintenance margin is the minimum margin level that must be maintained in your account while holding a position, to prevent excessive risk due to market fluctuations. If your account margin falls below the maintenance margin requirement, the system will trigger forced liquidation to limit further losses.

Minimum margin required during holding:
MM = (Maintenance Margin Rate × Underlying Price + Option Price) × Contract Multiplier
Example: Maintenance margin ≈ (0.075×115,000 + 200) × 0.01 = $88.25

What Is Settlement Price?

Settlement price is generated by floating a certain percentage above and below the mark price, resulting in the highest and lowest settlement prices. The price floated above the mark price is the highest settlement price, and the price floated below is the lowest settlement price. The floating percentages vary by option contract.

Settlement price serves two purposes:

1. It is used to calculate the value of positions and determine whether their equity is negative.
2. When reducing user positions, if market liquidity is insufficient, the settlement price is used to take over part of the user’s position.

What Is Forced Liquidation?

In Classic Accounts:

The system continuously monitors account risk rate and equity. If settlement price equity becomes negative, the account will be immediately taken over.
Risk rate ≥100% and exceeds the margin call period:

• The system will first cancel the pending orders occupying the highest margin, prioritizing risk reduction.
• If this is still insufficient, it will automatically reduce short positions; if the market cannot fill the orders, the system will take over corresponding positions at the settlement price.

During order cancellation or position reduction, if settlement price equity turns negative, the system will immediately liquidate all positions.
Risk rate ≥100% but still within the margin call period: Forced liquidation will not occur immediately; only a margin call reminder will be sent.
Risk rate ≥80%: The system will send a risk warning, reminding you to add margin or reduce positions promptly.

In Unified Account Mode:

When the total maintenance margin rate of the unified account drops to 100% or below, the system will automatically trigger partial forced liquidation to reduce risk. The process is as follows:

• Priority Order Cancellation and Position Reduction

• The system will first cancel pending orders occupying higher margin and check if the margin rate returns to normal.

• If still insufficient, the system will liquidate short options positions by priority, then repay loan liabilities.

• During liquidation, positions with higher liquidity and risk are reduced first, using batch reductions to minimize market impact.

• Market and Settlement Price Execution

• The system will prioritize placing orders in the secondary market; if market liquidity is insufficient, remaining positions will be taken over at the settlement price.

• After each liquidation, the system recalculates the account’s total maintenance margin rate. Once it returns above 100%, liquidation stops and remaining positions can be held.

• Special Case Handling

• If the market fluctuates sharply, all positions may be liquidated or even result in negative equity.

• The system will use the insurance fund to cover negative equity losses, and may initiate manual review if necessary.

What Is a Market Order?

A market order is a way to place a trade that is executed immediately at the best available price: buy orders are filled at the current best ask, and sell orders at the best bid. If a single price level cannot fill the entire order, the system will automatically match deeper order book levels, and the final result is based on the weighted average price. If there is insufficient liquidity, the order book disappears, or the price deviates too much from the mark price, the market order may be restricted or partially filled and then automatically canceled.

What Is the IV Order Function?

IV order (Implied Volatility order) is a way to place options orders using “implied volatility (IV) instead of price”. You only need to enter the desired IV, and the system will automatically convert that IV into the corresponding price and place it in the order book. As the market moves, the order will always display based on your set IV. IV orders are especially suitable for professional traders, as they allow you to quote by volatility rather than repeatedly adjusting orders based on price.

What Is the Advanced Order Function?

The advanced order function provides professional traders with more precise control over limit orders, supporting various execution rules such as Post Only, IOC, and FOK. This allows users to choose strategies like “only place orders without taking liquidity”, “immediate execution with partial cancellation”, or “must be fully filled at once”, enabling more flexible order logic, more controllable execution, and better fee performance in trading.

Gate reserves the final interpretation rights for this product.

Disclaimer

The content provided herein is for reference and educational purposes only and does not constitute any financial, investment, trading, or legal advice, nor does it constitute an offer or solicitation to buy or sell any digital assets. Gate makes no express or implied representations or warranties regarding the accuracy, completeness, or timeliness of the information contained herein. Product features, interfaces, rules, and fee structures may be updated or adjusted at any time. Please refer to the latest announcements and the actual information displayed on the Gate platform for the most accurate details.
Digital asset investments involve significant risk, and prices may fluctuate substantially. You may lose the entire amount of your investment. Please make decisions cautiously based on your own financial situation and risk tolerance after fully understanding the associated risks. If necessary, you are advised to consult an independent professional financial or legal advisor.
For more information about potential risks, please refer to Gate's Risk Disclosure and User Agreement.