Conversation with SignalPlus: Creating the most suitable trading tool for the options market.

On January 13th, SignalPlus BD Tony Tian, CFA visited BlockBeats AMA to talk to us about how the cryptocurrency options trading platform SignalPlus breaks the boundaries of options trading and creates the most suitable trading tools for the options market.

SignalPlus is a top-tier enterprise technology company that provides options trading solutions for digital assets and cryptocurrency assets. SignalPlus offers professional cryptographic options trading toolkits, including investment banking-level pricing, analysis, risk management, and direct trading capabilities.

Here is the text content of this AMA:

BlockBeats: Please have Tony Tian introduce the background of the project

Tony Tian: My name is Tony Tian. I am currently responsible for the business of SignalPlus. I have previously worked for the largest automotive finance company in the United States and have many years of experience in primary and secondary market investment and management. I am skilled in mergers and acquisitions valuation and financial derivatives investment.

SignalPlus was founded in 2021. As a technology company, SignalPlus aims to create an easy-to-use open technology platform to help users with varying levels of expertise easily achieve cryptocurrency options trading.

SignalPlus The team is composed of experienced traders, technicians, developers, and entrepreneurs, focusing on transforming their expertise in the field into practical programmatic software services through enterprise-level software solutions. This will help the cryptocurrency industry easily utilize such services and accelerate the development of the options market in a professional and sustainable manner.

BlockBeats: You have many years of experience in primary and secondary market investments. Why didn't you consider becoming a VC (investment fund) and instead chose to create an options platform?

Tony Tian: Our colleagues were all traditional financial traders in the early days, and their original intention was to create an investment fund to explore web3. However, as we delved deeper into trading, we found that there was a lack of tools in this field. Fortunately, we have team members with extensive development experience. So, during the trading process, we developed many tools that we believe are helpful. The options market is indeed a blue ocean, a market with great potential.

BlockBeats: Compared to spot and futures, the concept of options may be more unfamiliar to investors. Can you briefly introduce what options are?

Tony Tian: Simply put, an option is a right to choose whether to trade or not. After paying the premium, the buyer of an option has the right to buy or sell a certain underlying asset at the exercise price during the term of the option contract. If this right is to buy ETH at a specific price, we call it a bullish ETH option. If this right is to sell BTC at a specific price, we call it a bearish BTC option. This product gives the buyer the right to buy or sell an asset at a predetermined price within a specified period of time, and the buyer can choose to exercise the option to earn profits or to abandon the right and incur limited losses before the expiration date. However, once the seller receives the premium, they have the obligation to fulfill the contract. Because the rights and obligations of the buyer and seller are not equal, options are different from financial products such as spot and futures that emphasize equal rights and obligations of both parties, giving traders more flexibility.

To put it simply, a put option is a type of insurance. When the underlying asset falls below a certain price, you can sell your assets at a previously agreed price to someone else. At the same time, a call option means that when the asset rises quickly, you can buy in at a previously agreed price. Of course, this right requires some funds to be paid.

BlockBeats: Options are not yet widely used in the cryptocurrency market, but they are very common in traditional finance. Contrary to the cryptocurrency market, options trading volume in traditional finance is higher than that of futures. Why is this the case?

Tony Tian: In the traditional finance industry, the trading volume of options has already reached or even exceeded that of futures. First, let's talk about how popular options are in the traditional market. Around July 2020, the trading volume of individual stock options in the US stock market exceeded that of individual stocks for the first time, and the volume has continued to grow. During the most active period in 2021, an average of 39 million option contracts were traded per day, with individual investors accounting for more than 25%. Therefore, we believe that digital currencies will also develop in this direction. There are several specific reasons for this.

1. Options trading provides investors with greater flexibility and risk management capabilities. Options trading allows investors to limit their maximum profit or maximum loss by buying or selling options (just like the examples of lottery and insurance mentioned earlier). Options trading can help investors achieve margin trading and reduce trading risks.

2. Options trading can be applied to different market environments. Options trading can make money in the direction of the market trend when it is determined, and can also be used for arbitrage trading in uncertain situations.

3. Traditional financial options trading has also received support from regulation and infrastructure. With the increasing attention of regulatory agencies to the financial market, options trading has been better protected by regulation. At the same time, the development of trading infrastructure has made options trading more convenient and reliable. This has attracted more individual investors to participate in trading.

Overall, the flexibility, risk management capabilities, applicability, and regulatory infrastructure support of options have attracted more investors to participate in options trading, resulting in an increase in options trading volume, even surpassing that of spot and futures trading. In addition, the diversity of options trading also provides more investment portfolios and arbitrage strategies, further attracting more demand from investors.

BlockBeats: Why are options rarely used by users in the cryptocurrency market, despite their clear advantages, such as the ability to generate non-linear returns and limited losses?

Tony Tian: I believe the main reason is that there are differences between the cryptocurrency market and the traditional financial market. The specific reasons are as follows:

1. The maturity and liquidity of the cryptocurrency market are currently relatively low, and the market is also more unstable. Therefore, the volatility of the cryptocurrency market is greater than that of traditional finance, and the risk may be higher for options trading. In times of high market volatility, predicting and analyzing market trends is more difficult, and the risk increases accordingly. At the same time, 24/7 uninterrupted trading further increases the risk and cost for traders.

2. Currently, the regulation and infrastructure of the cryptocurrency options market are relatively poor, and the regulation and infrastructure are not well-developed, which leads to significant uncertainty in options trading in the cryptocurrency market. For example, recently, SOL's options contracts were delisted from Deribit due to various reasons such as liquidity.

3. Participants in the cryptocurrency industry differ from those in traditional finance. Cryptocurrency participants are generally younger and there are also many retail investors, who may have a lower level of understanding and awareness of options.

Therefore, I believe that the characteristics of the cryptocurrency market and its relatively immature state are the reasons why options trading is less common in this market. Options trading requires a more stable and mature market environment and more sophisticated infrastructure.

BlockBeats: In this market environment, what are some suitable strategies for investors who want to trade options?

Tony Tian: First of all, these strategies require subjective judgment. Everyone can use multiple strategies based on their own judgment and expectations. Some people may think that the market will rebound, while others may think that it will experience a significant correction. For example, if we believe that the market will experience a significant correction after this rebound, and we hold various ETH/BTC spot positions and want to protect our downside, then we can buy put options as insurance, as mentioned earlier. If we do not hold any spot positions but want to buy at a relatively low price in the next few months, we can sell put options with a strike price of $1,100 for ETH that expire in three months.

When the price falls below our exercise price, we can mentally acquire ETH at our desired price while collecting a premium to further enhance our return. This is like a charged limit order. If it's a bit more complicated, and we think the market will return to low volatility, trading sideways for a long time, we can sell straddles, buy butterfly options, or construct calendar spread strategies. These strategies may sound complex, but they are actually composed of multiple simple bullish or bearish positions. Our community has corresponding tutorials, and these commonly used strategies can also be found in the Smart Dealing component on the platform, guiding users to place orders quickly and easily.

BlockBeats: What problems do you think SignalPlus can solve in the current encrypted options market? Can it help options become more mainstream in the encrypted market?

Tony Tian: As we just mentioned, the prosperity of the options market relies on the trading infrastructure. Our SignalPlus has partnered with major exchanges such as Bybit and Deribit to provide users with trading services that are comparable to traditional investment banks, free and unlimited. This greatly reduces the threshold for options trading, whether for beginners or professional traders. Users can use the embedded toolkit, including dynamic delta arbitrage, intelligent execution strategies, and advanced risk management systems, to analyze, place orders, risk control, and profit and loss review. At the same time, our community provides macroeconomic analysis, options strategy tutorials, and community activities to further improve users' overall investment capabilities and achieve investment goals.

BlockBeats: In your experience, do you have any tips or new ideas for cryptocurrency options trading compared to traditional markets?

Tony Tian：  

1. Compared to traditional markets, cryptocurrency has a faster cycle and greater volatility, with 24-hour trading that naturally leads to higher volatility and greater spreads. Option traders can profit by judging volatility, bringing more lucrative returns than traditional markets. At the same time, compared to other financial products that mainly rely on betting on direction to profit, profiting from volatility is also an advantage of options.

2. It is because the cryptocurrency options market has a rich variety of coin-based products, which are relatively rare in traditional markets. From a long perspective, coin-based products have more advantages because they can add to the growth of the coin itself; conversely, from a short perspective, U-based products can protect the absolute value of the US dollar. However, it is worth noting that coin-based products are generally more suitable for investors with higher investment capabilities and risk tolerance, as multi-currency calculations are relatively complex, and coin-based margin trading comes with leverage, which requires higher control over margin.

3, The third point is that the cryptocurrency market is more transparent and open compared to traditional markets, with unimpeded access to on-chain information, allowing traders to react quickly.

At the same time, the project behind the targeted assets is also crucial. Various information, including underlying code, TVL, daily active users, number of developers, community proposals, etc., are also real-time and publicly transparent. Investors can make value judgments by conducting bottom-up analysis of such information.

BlockBeats: What kind of help do you think SignalPlus can provide for novice users?

Tony Tian: We provide comprehensive online and offline support! This includes instructional videos, as well as introductory tutorials on options that we have written internally in our education center. In addition to these, there are also many components in our platform toolbox that are tailored to ordinary users. These include visual profit charts, pre-set trading strategies, intuitive and customizable option chain displays of market trends and quote information, and more.

Believe that through this channel, novice users can quickly get started without barriers, and use our platform for digital currency options trading scientifically according to their own needs and goals. At the same time, I want to emphasize that our service is 100% free, just hoping to help users and enable a wider audience to participate in digital currency options trading.

BlockBeats: Tony, can you introduce the exclusive features of SignalPlus for professional traders?

Volatility Lab allows traders to visualize current market trends and find profitable opportunities in complex data.

Professional risk and return exposure calculation to manage corresponding positions.

Stress testing and profit and loss analysis under different risks

DDH (Dynamic Delta Hedging) uses robots to automatically track position deltas and help traders manage delta risks based on their personal risk preferences, while also pushing progress updates to Telegram.

Listener question:

Previously, I always paid attention to options settlement and felt that its impact on the market seemed to be smaller than that of futures. Is this because options can be offset?

Tony Tian: Because options are derivatives, their profits and losses are determined by spot and perpetual contracts. Therefore, theoretically speaking, their impact on the market is not significant and they are more like an output of market results.

Do these options require a license? Is it because options are difficult to comply with that they are less common in the industry?

Tony Tian: Of course, trading platforms require certain qualifications and licenses. As for options, I believe it is mainly due to liquidity and audience reasons. Its compliance is no more complex than other products such as futures.

How does a free service platform make a profit?

Tony Tian: We cooperate with exchanges because by using our products, we bring traffic to the exchanges. The exchanges will give us certain rewards, but I want to emphasize that it will not have any impact on the user's fees. If you trade with zero commission, your fees will not change when using our products.

欢迎加入律动 BlockBeats 官方社群：

Telegram 订阅群：https://t.me/theblockbeats

Telegram 交流群：https://t.me/BlockBeats_App

Twitter 官方账号：https://twitter.com/BlockBeatsAsia