You need an existing CCM brokerage account to enable options trading. If you don't have a CCM brokerage account yet, see Stocks and funds onboarding.
Options trading carries risk. You can lose your entire premium if a contract expires worthless, and its value can erode over time as it nears expiration.
Options trading offers buyers and sellers the chance to act on how they expect a stock's price to move. Buyers pay a premium for the right to trade at a set price later, while sellers collect the premium in exchange for the obligation to follow through if that right gets used. On Coinbase, you can currently only buy options contracts.
How it works
An options contract is an agreement between a buyer and a seller that gives the buyer the right to buy or sell 100 shares of a specific stock at a set price (the strike price) before a set expiration date.
Coinbase customers have access to two types of contracts: long call options (right to buy) and long put options (right to sell). The price you pay for one of these contracts is called the premium: it's quoted per share, paid upfront, and the most you risk losing for the transaction.
Example scenarios at options expiration: A stock is trading at $50 and you expect it to rise. You buy one call option (the right to buy 100 shares at $50) and pay a $200 premium ($2 x 100 shares).
Stock rises to $60: Your contract is automatically exercised at expiration, meaning you buy 100 shares at $50. Selling those shares at $60 would give you a total gain of $1,000. After you factor in your initial $200 premium, your net profit is $800.
Stock rises to $51: Your contract is automatically exercised at expiration, meaning you buy 100 shares at $50. Selling those shares at $51 would give you a total gain of $100. After you factor in your initial $200 premium, the trade still results in a $100 net loss, even though the stock moved the way you expected.
Stock stays at $50 (or falls): Buying 100 shares at $50 would result in a total gain of $0 (or less), so these contracts typically expire worthless instead of being exercised. After you factor in your initial $200 premium, your net loss is the full $200.
A put option works the same way in reverse. You pay a premium for the right to sell shares at a set price, which can increase in value if the stock falls.
Once you buy a contract, you can sell it or exercise it.
Apply for options trading
If you haven't already applied for options trading, follow the steps below.
From the home screen, select Stocks, followed by the settings icon.
Select Options to reach Options settings, then Enable options.
Follow the on-screen prompts to determine eligibility and complete onboarding.
If approved, you'll see your options level and the strategies you have access to. If you're not eligible, you'll see a message explaining that you don't currently qualify.
To disable options trading, return to Options settings and select Disable options. You must close any open options orders and positions before disabling.
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Disclosures
All securities and investments are offered by Coinbase Capital Markets Corp, member FINRA/SIPC. Securities services offered by Coinbase Capital Markets Corp are separate from digital asset services provided by Coinbase Inc., and any affiliates. SIPC does not apply to digital assets or cash held in your Coinbase Inc. or affiliate account. Additional information about your broker, Coinbase Capital Markets Corp, can be found on FINRA’s BrokerCheck (https://brokercheck.finra.org). Execution, clearing and custody of all securities are provided by Apex Clearing Corporation.
Securities and stock options are offered by Coinbase Capital Markets Corp, member FINRA/SIPC. Options trading privileges are subject to application and approval. Options trading involves significant risk and is not appropriate for all investors. For additional margin risks and disclosures, please visit Characteristics and Risks of Standardized Options.
For UK customers, stock trading is offered by CB Payments Ltd (CBPL), which is authorized and regulated by the Financial Conduct Authority (FRN: 1045733). CBPL is authorized to arrange access to Coinbase Capital Markets Corp and Apex Clearing Corporation for execution, clearing, and custody.
Futures products and services are offered in the U.S. by Coinbase Financial Markets, a member of NFA and is subject to NFA’s regulatory oversight and examinations. Access to the referenced financial products requires user eligibility, and may not be available in all jurisdictions. The risk of transacting in futures can be substantial and may not be suitable for everyone. Not investment advice or a recommendation to trade a particular contract or to employ a particular strategy.
Outside the U.S. (excluding India and Australia)
Outside U.S., derivatives are available only to eligible users in select jurisdictions and are offered by Coinbase Bermuda Ltd., a Class F entity licensed by the Bermuda Monetary Authority. All trading and investment strategies involve risk, including loss of capital, and may not be suitable for all. Leverage in derivatives trading can work for you or against you.
India
Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.
Coinbase India Private Limited is registered with FIU-IND to provide virtual digital asset services.
Australia
In Australia, derivatives trading is offered by Coinbase Australia Pty Ltd ACN 654 922 442 ("Coinbase Australia"). Any advice provided is general in nature and has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the advice having regard to your own circumstances. Derivatives Trading is high risk and you may lose your entire balance. Before making any decisions about whether to use a product, you should read the applicable Product Disclosure Statement, Financial Services Guide and Target Market Determination.
Coinbase Australia is licensed and regulated by the Australian Securities and Investments Commission ("ASIC"), AFSL No. 569752. Coinbase is also registered and enrolled with the Australian Transaction Reports and Analysis Centre ("AUSTRAC") as a virtual asset service provider and a remittance service provider.
This article is for informational purposes only and does not constitute the provision of investment advice. The customer assumes full responsibility for its trading activity and should consult its advisors for its specific situation. This material is not (i) an offer, or solicitation of an offer, to invest in, or to buy or sell, any interests or shares, or to participate in any investment or trading strategy, (ii) intended to provide accounting, legal, or tax advice, or investment recommendations. The information is believed to be current as of the date indicated and may not be updated or otherwise revised to reflect information that subsequently became available or a change in circumstances after the date of publication. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing. Recipients should consult their advisors before making any investment decision.
"Funds" in this article is a generic term and may refer to exchange traded funds (ETFs) and/or mutual funds. Securities products are subject to availability and may change at CCM's discretion. See the most up-to-date information on CCM's product offerings.