About UpDown Options

Information on UpDown Options in the Crypto.com App, covering common queries and scenarios that users may encounter while trading.

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Introduction

About UpDown Options

UpDown Options is a special type of option that automatically gets terminated (or “knocked out”) if the underlying asset’s price hits a predetermined ceiling or floor price. This locks in your profits or protects you against large losses.

You can choose to buy or sell a contract depending on which way you think the market will go:

  • If you think an asset’s price will go up, you can buy a contract to open a long position.

  • If you think an asset’s price will go down, you can sell a contract to open a short position.

UpDown Options enables you to manage risk because you will know the maximum possible loss or profit upfront.

To learn more about UpDown Options, check out our University article.

Is Trading UpDown Options Legal?

UpDown Options is offered by Crypto.com | Derivatives North America, which is operated by the North American Derivatives Exchange, Inc. (Nadex) and subject to US regulatory oversight by the Commodity Futures Trading Commission (CFTC).

Trading UpDown Options

Prerequisite

Onboarding

To trade UpDown Options, you will need to set up an account with Crypto.com | Derivatives North America:

  1. Go to the Leverage tab in the Crypto.com App

  2. Tap the top banner to set up your USD Fiat Wallet if you have not done so already

  3. Tap the top banner to enable Derivatives trading

  4. Accept and confirm the Terms & Conditions

  5. Complete the Qualifying Questions and tap Continue

  6. You will receive an in-app notification and email when your account is approved

  7. Congrats, you can start trading UpDown Options!

Funding

UpDown Options is a fully collateralized trading product. You need to have sufficient funds in your USD Fiat Wallet to trade UpDown Options. The calculation for your available balance may include unsettled funds (i.e., via Instant Deposit). Visit our Help Center for more information on USD deposits with Wire Transfer and ACH Direct Deposit and how you may use Instant Deposit for trading Derivatives.

Alternatively, if you have insufficient funds in your USD Fiat Wallet, you can use Crypto Funding to pay the remaining amount in your order with your preferred cryptocurrency. This feature currently supports all 350+ tokens in the Crypto.com App, including BTC, ETH, and CRO.

Getting Started with UpDown Options

Applicable Fees

The following fees are charged for each contract of a trade:

  • $1.00 Exchange Fee

  • $0.99 Technology Fee

For example, when you open a position, the fees are added to your trade amount and debited from your USD Fiat Wallet. If you open a long position by buying two contracts, you will pay ($1.00 + $0.99) * 2 = $3.98.

This also applies if you open a short position by selling two contracts. I.e., you will also pay $3.98.

  • Debited Amount = (Current Price - Stop Level) + Exchange Fee ($1.00) + Technology Fee ($0.99)

Similarly, when a position is closed, the fees are deducted before the final amount is credited to your USD Fiat Wallet. If you close a long position by selling two contracts, you will incur fees of ($1.00 + $0.99) * 2 = $3.98.

This also applies if you close a short position by buying two contracts. I.e., you will incur $3.98 in fees as well.

  • Credited Amount = Initial outlay for opening the position + Profit - Exchange Fee ($1.00) - Technology Fee ($0.99)

How are the fees charged when my contract is knocked out at a loss?

Your maximum loss is the amount you put into a trade when opening a position. If your position is closed at the Stop Level, or close to the Stop Level such that the full fee cannot be deducted, you will not receive a credit but you will also not be further debited for fees.

For example, consider a scenario where you close a position of one contract at a loss. The fees incurred depend on the closing price relative to the Stop Level:

  • If the closing price is $1.99 or more away from the Stop Level,

    • Credited Amount = Initial outlay for opening the position - Loss - Exchange Fee ($1) - Technology Fee ($0.99)

  • If the closing price is less than $1.99 away from the Stop Level,

    • No amount will be credited

    • The Exchange Fee takes precedence over the Technology Fee:

      • If the closing price is $1.20 away from the Stop Level, the Exchange Fee is $1, and the Technology Fee is $0.20.

      • If the closing price is $0.20 away from the Stop Level, the Exchange Fee is $0.20, and no Technology Fee is charged.

      • If the position is knocked out at the Stop Level (Max. Loss), no fees are incurred.

Calculations

Amount Paid to Enter a Trade

Before confirming your order to place a trade, you will review the Indicative Amount you need to pay.

The Indicative Amount is the difference between the Current Price and the Stop Level, plus fees and your set Slippage Tolerance. This also takes into account the Tick Size and Tick Value of the contract. This amount will be held in your USD Fiat Wallet until your order is filled or rejected.

When your order is filled, the actual amount you pay will be reflected in your Order History. Your maximum loss is the cost you put into the trade.

Example 1: You open a long position

ETH’s price is $3,000 and you would like to build a long position. You buy two contracts with the details below:

  • Target Price - $3,050

  • Stop Price - $2,950

  • Tick Size - 1

  • Tick Value - $2.5

  • Contract Price (ASK) - $3,005

  • Slippage Tolerance - $5

The Indicative Amount held in your USD Fiat Wallet is calculated by:

((Contract Price - Stop Level) * Tick Value / Tick Size + Slippage Tolerance + Exchange Fee + Technology Fee) * Number of Contracts

= ((3,005 - 2,950) * 2.5 / 1 + 5 + 1 + 0.99) * 2

= $290.98

Assuming your order was filled at $3,006, the actual amount debited from your USD Fiat Wallet will be calculated by:

((Actual Contract Price - Stop Level) * Tick Value / Tick Size + Exchange Fee + Technology Fee) * Number of Contracts

= ((3,006 - 2,950) * 2.5 / 1 + 1 + 0.99) * 2

= $283.98

Example 2: You open a short position

ETH’s price is $3,000 and you would like to build a short position. You sell two contracts with the details below:

  • Target Price - $2,950

  • Stop Price - $3,050

  • Tick Size - 1

  • Tick Value - $2.5

  • Contract Price (BID) - $2,995

  • Slippage Tolerance - $5

The Indicative Amount held in your USD Fiat Wallet is calculated by:

((Stop Level - Contract Price) * Tick Value / Tick Size + Slippage Tolerance + Exchange Fee + Technology Fee) * Number of Contracts

= ((3,050 - 2,995) * 2.5 / 1 + 5 + 1 + 0.99) * 2

= $288.98

Assuming your order was filled exactly at $2,995, the actual amount debited from your USD Fiat Wallet will be equal to the Indicative Amount above, which is $288.98.

Amount Received From Closing a Trade

When a position is closed, your USD Fiat Wallet will be credited the difference between the Closing Price and Stop Level of the contract. This takes into account the Tick Size and Tick Value of the contract, after deducting fees.

Example 1: You have a long position of 10 BTC contracts with these details

  • BTC’s Indicative Price - $65,200

  • Target Price - $65,400

  • Stop Price - $64,900

  • Tick Size - 1

  • Tick Value - $1

  • Contract Price (BID) - $65,195

  • Slippage Tolerance - $5

When the contract expires at the current Contract Price, your USD Fiat Wallet will be credited with:

MAX (0, ((Contract Price - Stop Level) * Tick Value / Tick Size - Exchange Fee - Technology Fee) * Number of Contracts)

= MAX (0, ((65,195 - 64,900) * 1 / 1 - 1 - 0.99) * 10)

= $2,930.10

When your position is knocked out at its maximum profit (Target Level), your USD Fiat Wallet will be credited withy:

MAX (0, ((Target Level - Stop Level) * Tick Value / Tick Size - Exchange Fee - Technology Fee) * Number of Contracts)

= MAX (0, ((65,400 - 64,900) * 1 / 1 - 1 - 0.99) * 10)

= $4,980.10

When your position is knocked out at its maximum loss (Stop Level), you will not be credited or debited any amount. Your maximum loss is only the amount you put into the trade.

When you proactively close your position at the current Contract Price, your USD Fiat Wallet will be credited with:

MAX (0, ((Contract Price - Stop Level) * Tick Value / Tick Size - Exchange Fee - Technology Fee) * Number of Contracts)

= MAX (0, ((65,195 - 64,900) * 1 / 1 - 1 - 0.99) * 10)

= $2,930.10

Example 2: You have a short position of 10 BTC contracts with these details

  • BTC’s Indicative Price - $65,200

  • Target Price - $65,400

  • Stop Price - $64,900

  • Tick Size - 1

  • Tick Value - $1

  • Contract Price (ASK) - $65,205

  • Slippage Tolerance - $5

When the contract expires at the current Contract Price, your USD Fiat Wallet will be credited with:

MAX (0, ((Stop Level - Contract Price) * Tick Value / Tick Size - Exchange Fee - Technology Fee) * Number of Contracts)

= MAX (0, ((65,400 - 65,205) * 1 / 1 - 1 - 0.99) * 10)

= $1,930.10

When your position is knocked out at its maximum profit (Target Level), your USD Fiat Wallet will be credited with:

MAX (0, ((Stop Level - Target Level) * Tick Value / Tick Size - Exchange Fee - Technology Fee) * Number of Contracts)

= MAX (0, ((65,400 - 64,900) * 1 / 1 - 1 - 0.99) * 10)

= $4,980.10

When your position is knocked out at its maximum loss (Stop Level), you will not be credited or debited any amount. Your maximum loss is only the amount you put into the trade.

When you proactively close your position at the current Contract Price, your USD Fiat Wallet will be credited with:

MAX (0, ((Stop Level - Contract Price) * Tick Value / Tick Size - Exchange Fee - Technology Fee) * Number of Contracts)

= MAX (0, ((65,400 - 65,205) * 1 / 1 - 1 - 0.99) * 10)

= $1,930.10

Profit and Loss (PnL)

Unrealized PnL

You will have an Unrealized PnL if you have an open position. It will be updated as the current Contract Price moves. It is calculated by comparing the current Contract Closing Price and the average Entry Price for your open positions. It takes into account the Tick Size and Tick Value of the contract as well.

This calculation excludes all fees (e.g., Exchange and Technology Fees).

Example 1: You have a long ETH position of two contracts

  • Average Entry Price - $3,020

  • Tick Size - 1

  • Tick Value - 2.5

  • ETH’s Indicative Price - $3,040

  • Current Contract Price (BID) - $3,035

Unrealized PnL = ((Contract Price - Average Entry Price) * Tick Value / Tick Size) * No. of Contracts

= (($3,035 - 3,020) * 2.5 / 1) * 2

= $75

Example 2: You have a short ETH position of two contracts

  • Average Entry Price - $3,020

  • Tick Size - 1

  • Tick Value - 2.5

  • ETH’s Indicative Price - $3,040

  • Current Contract Price (ASK) - $3,045

Unrealized PnL = ((Average Entry Price - Contract Price) * Tick Value / Tick Size) * No. of Contracts

= ((3,020 - 3,045) * 2.5 * 1) * 2

= -$125

Your Unrealized PnL excludes the fees charged for opening the position.

Unrealized PnL = ((Difference between Average Entry Price and Current Price) * Tick Value / Tick Size) * No. of contracts in the open position

When the Current Price is $1,900, your Unrealized PnL is -$175.

((1,865 - 1,900) * 2.5 / 1) * 2 contracts = -175

When the Current Price drops to $1,840, your Unrealized P&L will be $125.

((1,865 - 1,840) * 2.5 / 1) * 2 contracts = 125

Realized Profit/Loss

You will have a Realized Profit/Loss if you have closed a position. It is calculated by comparing the Contract Closing Price and the Average Entry Price for the positions that were closed. This takes into account the Tick Size and Tick Value of the contract.

This calculation includes all fees.

Example 1: You have a long ETH position with two contracts

  • Target Level - $3,100

  • Stop Level - $3,000

  • Tick Size - 1

  • Tick Value - 2.5

  • ETH’s Indicative Price - $3,030

  • Exchange Fee - $1.00

  • Technology Fee - $0.99

a) When you opened the long position at a Contract Price of $3,035, you were debited $178.98:

((Contract Price - Stop Level) * Tick Value / Tick Size + Exchange Fee + Technology Fee) * Number of Contracts

= ((3,035 - 3,000) * 2.5 / 1 + 1 + 0.99) * 2

= $178.98

b) When you closed the position by selling two contracts at a Contract Closing Price of $3,040, you were credited $196.02:

MAX (0, ((Contract Price - Stop Level) * Tick Value / Tick Size - Exchange Fee - Technology Fee) * Number of Contracts)

= MAX (0, ((3,040 - 3,000) * 2.5 / 1 - 1 - 0.99) * 2)

= $196.02

c) Your Realized P&L is $17.04.

Amount credited when the position is closed/ expired/ knocked out - Amount debited when the position was opened

= 196.02 - 178.98

= $17.04

Example 2: You have a short ETH short position with two contracts

  • Target Level - $3,000

  • Stop Level - $3,100

  • Tick Size - 1

  • Tick Value - 2.5

  • ETH’s Indicative Price - $3,030

  • Exchange Fee - $1.00

  • Technology Fee - $0.99

a) When you opened the short position at a Contract Price of $3,025, you were debited $378.98:

((Stop Level - Contract Price) * Tick Value / Tick Size + Exchange Fee + Technology Fee) * Number of Contracts

= ((3,100 - 3,025) * 2.5 / 1 + 1 + 0.99) * 2

= $378.98

b) When you closed the position by buying two contracts at a Contract Closing Price of $3,075, you were credited $121.02:

MAX(0, ((Stop Level - Contract Price) * Tick Value / Tick Size - Exchange Fee - Technology Fee) * Number of Contracts)

= MAX(0, ((3,100 - 3,075) * 2.5 / 1 - 1 - 0.99) * 2)

= $121.02

c) Your Realized PnL is -$257.96.

Amount credited when the position is closed/ expired/ knocked out - Amount debited when the position was opened

= 121.02 - 378.98

= -$257.96

Useful Trading Information

Contract Specifications

Please visit the Crypto.com website for the full list of contract specifications.

Supported Tokens

Supported tokens are listed along with their contract specifications. Please visit the Crypto.com website for more details.

Trading Hours

Crypto.com | Derivatives North America is open for Crypto UpDown Options trading at 11pm ET Friday and expires at 4:15 pm ET the following Friday, unless contracts are knocked out beforehand.

For updates, holiday schedules, and contract availability, please see the Holiday and Hours page and the Notices page in the Crypto.com | Derivatives North America website.

Limit

Position Limits

A position limit defines the maximum aggregate position you can hold for UpDown Options per the underlying crypto market. The position limits for UpDown Options are set at 250 for all available tokens.

This means you can have a maximum of 250 open positions for BTC and 250 for ETH respectively. The open position count includes both long and short positions across all available contracts for the underlying market.

Example:

  • You have an initial open long position of 245 BTC contracts

  • You would like to buy eight more contracts with a different target price to capture the anticipated uptrend. This trade will be unsuccessful as there would be a total of 253 open positions.

  • Instead, you would be able to buy five more BTC contracts, bringing your total open position count to 250.

  • On the other hand, you plan to sell eight ETH contracts as you believe the token price will fall. This trade will be successful which results in you having eight ETH open positions alongside your initial 245 BTC long positions.

Order Limits

There are no order limits when trading contracts for any available token in a single order.

Order Type

The orders you submit to trade UpDown Options are Market Orders (“MO”) with protection on an Immediate-or-Cancel (“IOC”) basis¹.

An MO with protection is a request submitted to buy or sell a set number of UpDown Option contracts at the displayed contract price when the order is submitted. In the event that the displayed contract price is no longer available when Crypto.com | Derivatives North America receives the order, the MO with protection order will be acceptable to fill within the Slippage Tolerance.

An IOC order demands immediate execution or cancellation. It can be filled in whole or in part, with any remaining quantity automatically canceled. This is also known as a Partial Fill.


¹Prior to June 13, 2023, UpDown Options orders were MO with protection on a Fill-or-Kill (“FOK”) basis. While an FOK order also demands immediate execution or cancellation, it permits your order to be offered or bid on a one-time basis only. If the entire order is not filled immediately, it is automatically canceled.

Slippage Tolerance

Slippage Tolerance allows your trade to be completed even if the coin's price moves from the time you place the order to the time it is executed. It is a predetermined number of points, expressed as a dollar value, away from the displayed indicative price that will be acceptable to fill the MO with protection order.

If the coin’s price movement is within the tolerance you set, your order will be executed either in full or partially. If the coin’s price movement exceeds the tolerance you set, your order will not be executed because partial order fulfilments are not accepted.

How do I adjust my Slippage Tolerance?

The default tolerance per contract is US$5. It can be adjusted between US$1-25 by tapping on the Settings button at the bottom of the Leverage tab in the App.

The higher your Slippage Tolerance, the more likely your order will be executed. Orders exceeding your set tolerance will not be filled.

Contract Price and Token Price

  • Contract Price: The contract price is the price at which a contract can be bought or sold.

  • Token Price: The token price represents the current value at which the token is being traded on the open market. You should always refer to the token price displayed on the Derivatives product trading screens in the App for your trades.

Bid-Ask Spread

UpDown Options has a bid price for users who want to sell a contract, and an ask price for users who want to buy a contract. The difference between these two prices is the bid-ask spread.

When there is high liquidity in the market, the spread is typically narrower. On the other hand, during periods of low liquidity with fewer quotes, the spread will be wider. It is always important to note the price you are committing to prior to a buy or sell trade.

Differences between the Contract and Token Price

For UpDown Options, the contract price is in the range of the token price. However, these two should not be confused with each other. Trading UpDown Options is not the same as buying a token on the Spot market at its indicative price. Instead, you will be trading on the contract’s respective bid or ask prices, depending on whether you are selling or buying the contract.

Calculation of Asset’s Settlement/ Indicative Index Price

The Indicative Index Price of the underlying asset is calculated once every second throughout the entire contract duration of any UpDown Options contract. CDNA calculates this indicative price value by taking the midpoints between the BID/ASK spread that occurred within a fixed period leading up to the calculation time. There are minimum requirements for the number of midpoints that are included in the calculation, along with additional computations that ultimately determine the Indicative Index Price. The same calculation methodology is also used to determine the settlement value for any specific UpDown Options contract.

You are encouraged to visit the CDNA Rulebook and Legal Documents for additional details. If you are on the App, you can navigate to Settings > About > Terms & Conditions > CDNA Rules to find out more.

Effective Leverage

Effective leverage is a measurement of your trade position’s contract value as compared to the maximum loss (the amount you pay to enter the position excluding trading fees), taking into account the Contract Value Factor.

This can be calculated by the following formula:

Effective Leverage = Asset Contract Price / Max Loss x Contract Value Factor.

Contract Value Factor can be found in the What is Contract Value Factor section below.

Why is Effective Leverage related to UpDown Options?

UpDown Options have built-in effective leverage, granting you greater asset exposure at no additional capital cost. You may pick the contract that offers you the effective leverage you are looking for.

For example, if you pay $100 to buy an UpDown Options contract when BTC’s price is at $70,000, you are already entitled to a 700x effective leverage. And when BTC rises by $200 to $70,200, your $100 contract can help you generate a potential profit of $200 without having to use $70,000 to trade 1 BTC.

With a predefined Stop Level price embedded in each UpDown Options contract, you also get to enjoy the above leverage with built-in protection. You won’t lose more than the amount you pay to open the position.

Contract Value Factor

Contract Value Factor is a multiplier of the contract cost (the amount you pay to enter the position excluding trading fees) that, along with the contract price, determines the effective leverage of a contract. This can be calculated by the following formula:

Contract Value Factor = Tick Value / Tick Size

Here is a summary of the Contract Value Factors of the tokens supported by Derivatives in the Crypto.com App:

Tokens

Contract Value Factor

BTC

1

ETH

2.5

LTC

20

BCH

10

DOGE

20,000

SHIB

100,000,000

AVAX

200

LINK

250

DOT

500

XLM

20,000

HBAR

40,000

How do you find Effective Leverage?

  1. Select “Up” or “Down” for a token under the UpDown Options section on the Leverage Tab

  2. Review the details of the four contracts available

  3. Effective leverage is shown in the contract details and updated based on the latest bid and ask prices for each contract

  4. Tap on the tooltip icon which opens up a popup to explain what is Effective Leverage

Examples of Effective Leverage:

BTC Long Position:

  • Contract Price = $60,000

  • Contract Value Factor = 1

So, the effective leverage = $60,000 / Contract Cost x 1

Contract

Stop Price

Target Price

Contract Cost*

Leverage

1

$59,600

$60,100

$400

150x

2

$59,700

$60,200

$300

200x

3

$59,800

$60,300

$200

300x

4

$59,900

$60,400

$100

600x

ETH Short Position:

  • Contract Price = $3,600

  • Contract Value Factor = 2.5

So, the effective leverage = $3,600 / Contract Cost x 2.5

Contract

Stop Price

Target Price

Contract Cost*

Leverage

1

$3,670

$3,420

$175

51x

2

$3,690

$3,440

$225

40x

3

$3,710

$3,460

$275

33x

4

$3,730

$3,480

$325

28x

*The contract cost does not include the exchange and technology fees.

Liquidity

What happens when there is insufficient liquidity in the market?

When the market has insufficient liquidity, it means there is no party offering to match the other side of your order. You will either see that there are no price quotes available to place your trade or that your trade will not be executed.

Simply put, if you want to buy a contract, there must be another party selling it to match your purchase order, and vice versa.

Possible Reasons for Insufficient Liquidity Include:

1. Expiry Time: As the expiry time of an UpDown Options contract approaches, there is less time for the price to move significantly to impact profitability. This leads to fewer parties, or none at all, willing to take on the less desirable side of the trade.

For example, if you wanted to exit a position that is loss-making, the other party matching your order will only have a limited time to turn a profit.

Three minutes before a contract expires, an alert will be shown on the Position Details screen, informing you that you are nearing the Low Liquidity Zone (the final 30 seconds before your contract expires).

30 seconds before a contract expires, an alert will be shown to inform you that you are in the Low Liquidity Zone.

2. Token Price Close to Target or Stop Prices: If the current price of the underlying token is very close to either the UpDown Options Target or Stop prices, the probability of the contract expiring profitably for a long position is either very high or very low respectively.

If you want to exit a position when the price is close to the Stop level, the other party matching your order will have a higher likelihood of being knocked out at loss. Therefore, they may not be willing to make the trade.

When There Is Insufficient Liquidity:

When you have an open position and there are no price quotes available for you to close your position, a Liquidity Alert message will be shown on the Position Details screen. If there are less than 30 seconds to contract expiry, you will see the Low Liquidity Zone alert.

No price quotes available to close a position when the position has >30 seconds to expiry

No price quotes available to close a position when the position has <30 seconds to expiry

Liquidity Alert:

Low Liquidity Zone Alert:

When there is no Price to Close, your Unrealized PnL cannot be calculated. The Likely Payout will be shown to provide an indication of your payout (excluding fees) instead. This is based on where the indicative Token Market Price is relative to the Stop Price.

For example, if the Token Market Price is $10 away from the Stop Price of your long BTC position, your contract has a likely payout of $10 (excluding fees).

Likely Payout = MAX (0, ((Token Market Price - Stop Level) * Tick Value / Tick Size) * no. of contracts)

Glossary

Term

Definition

Range

The range is the difference between the Target and Stop price of an UpDown Options contract. The contract value will move along with the price movement in the underlying market within the range and be knocked out if either the Target or Stop is reached.

Tick size

The tick size is the smallest increment a price can move in any market.

Example:

If BTC UpDown Options has a tick size of 1, and it is currently $65,000, the next price increase will be $65,001.

Tick value

The tick value is the value (in USD) of a tick size of the UpDown Options contract.

The ratio of tick value / tick size corresponds to the unit of underlying assets in one unit of Derivatives product.

Example:

If BTC UpDown Options has a tick size of 1 and tick value of 1, for every $1 move in the price of BTC, the BTC UpDown Options contract value will move by $1 as well.

If ETH UpDown Options has a tick size of 1 and tick value of 2.50, for every $1 move in the price of ETH, the ETH UpDown Options contract value will move by $2.50.

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