Binance launched stock options linked to selected US-listed stocks and exchange-traded funds on September 1. The regulated product gives eligible users access to physically settled contracts through a brokerage structure available directly on its platform.
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According to the announcement, the service supports call and put options with expiration dates. Calls give buyers the right to purchase shares at a set strike price, while puts provide the right to sell them.
Binance is offering the contracts through Nest Trading Limited, which serves as the introducing broker. US-regulated Alpaca Securities handles clearing, settlement, and custody of shares delivered after contracts are exercised.
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Why Binance Options Use Share Settlement
Unlike cash-settled derivatives, these options settle through delivery of the underlying securities. Cash-settled products instead pay the difference between the strike price and final settlement value without transferring shares.
Exercising a call allows the holder to buy the underlying shares at the strike price. Exercising a put allows the holder to sell those shares at that price, subject to funding, position, and exercise requirements.
The shares gained from settlement are still held in custody by Alpaca Securities. This can be followed by users using the Binance stock trading platform and funding account post-settlement.
These are traditional securities options and not tokenized equities or perpetual futures of cryptocurrencies. They have a schedule according to the US markets and lead to the gaining of actual shares and not blockchain-based equivalents.
The launch is done in accordance with the long-only framework. Customers are allowed to trade calls and puts but cannot write any options.
How Nest Trading Processes Binance Options Orders
For an option buyer, the risk is the premium for buying the option. However, there can be a case where the option expires out of the money, as the underlying security does not rise above the strike price before expiration.
Only limit orders are available at the first phase. Clients need to provide their highest willing price, ensuring they have price control rather than accepting the best price that may be available via the market order.
The Nest Trading platform will handle the order entry function and introduce Binance customers who qualify for the US brokerage service.
Alpaca Securities handles all the necessary processes of the regulated US brokerage, such as executing the trades and holding the securities in client accounts.
What Binance May Add After Its Initial Options Launch
Alpaca describes itself as a self-clearing regulated broker-dealer. Alpaca and Binance collaborated on the direct trading access to certain US stocks and ETFs released in June by Binance for eligible clients.
The exchange did not disclose a complete list of countries. However, it warned about the possibility of restrictions on stock options in some jurisdictions, where customers would have to confirm their account eligibility and local regulations.
Future developments may bring new underlying assets, order types, and contracts other than the long-only contracts that are currently available.
Binance has not announced a timetable for these potential additions or confirmed which features will arrive next.
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