1. Role Map: The “Four Major Families” of the Options Market

Imagine the options market is a super casino with four types of people:

1. Buyer (rights holder) : A gambler who buys chips, with limited losses and unlimited gains

2. Seller (Obligated Party) : The owner of a casino, making small profits but taking big risks

3. Market Maker : A counter that exchanges chips and makes money by the difference between buying and selling prices.

4. Arbitrageurs : Scalpers patrolling the market, picking up price loopholes

The Tesla and Bitcoin options markets are like two casinos - one is strictly regulated (Wall Street) and the other is the Wild West (cryptocurrency), but the four major players are active in both.

2. Buyer: Use "lottery thinking" to leverage wealth

Classic operation :

• US stock case : Reddit retail investors spent $3,000 to buy GameStop (GME) call options with an exercise price of $40. Two weeks later, GME rose to $483, and the option value increased 200 times

• Bitcoin case : In 2021, someone used 0.01 Bitcoin to buy a "60,000 USD call option in one week", and as a result, Bitcoin surged to 64,000 USD, making a profit of 640 times

Survival rules :

1. Betting on out-of-the-money options (cheap lottery tickets)

2. Control position <5% (avoid zeroing)

3. Keep a close eye on catalysts (earnings reports, interest rate cuts, CPI data, etc.)

Fatal trap : A newbie bet his down payment on a $100,000 Bitcoin option. As a result, Bitcoin price was cut in half and the option became worthless - remember, time is the buyer's enemy !

3. Sellers: Adventurers who earn “insurance premiums”

Core logic : It’s like running an insurance company and collecting premiums, but if you encounter a “major car accident” like Tesla failing to brake or Bitcoin crashing 90%, you may lose all your money.

Actual combat case :

• US stock agency : JPMorgan Chase sells S&P 500 put options every year and collects billions of dollars in "premiums"

• Bitcoin miners : Selling call options while mining is equivalent to insuring future bitcoin output

Risk control tips :

1. Diversify your selling (don’t just sell options on one stock, sell options on several)

2. Dynamic hedging (offsetting risk with spot or futures)

3. Avoid major events (don’t sell options the night before earnings)

A bloody history : Before the collapse of LUNA in 2022, a team frantically sold Bitcoin put options to earn premiums. As a result, LUNA returned to zero, triggering a series of liquidations and a loss of US$210 million in a single day.

4. Market Makers: The Survival Path of Human Money Printing Machines

Daily work :

• Citadel, a US stock market maker : quotes 300 times per second, earns $0.01 per transaction from the bid-ask spread, and earns tens of billions of dollars per year

• Bitcoin exchange Deribit : Thousands of options contracts are listed at the same time, and the volatility surface model is used for pricing

Tips to make money :

1. High-frequency order brushing (a trading system that is faster than lightning)

2. Volatility control (using IV as a thermometer to adjust quotes)

3. Black technology protection (using satellites to predict agricultural data to affect commodity options)

Industry insider information : Some small exchanges will "pull the plug" when Bitcoin plummets, making it impossible for market makers to close their positions - so always choose regular platforms such as CME and Deribit!

5. Arbitrageurs: Human Scanners of Financial Markets

Classic Battles :

• Cross-market arbitrage : When Tesla US stock options are 0.5% cheaper than the German market, the program completes cross-border scalping in 0.1 seconds

• Volatility arbitrage : long Bitcoin option volatility + short Ethereum option volatility, earn the difference

• Delivery arbitrage : On the quarterly delivery date of Bitcoin, simultaneously operate spot + options to lock in the price difference

Required skills :

1. Mathematical genius (proficient in Black-Scholes model)

2. Technology geek (self-built millisecond-level trading system)

3. Intelligence experts (monitoring regulatory policies, miners’ positions)

Crash scene : In 2023, a team discovered the price difference between Coinbase and Binance Bitcoin options. During the arbitrage process, they encountered an exchange API failure and lost $2 million - technical failure is the biggest risk !

In short, arbitrage is a professional trading behavior, which is difficult for retail investors to operate, so they just need to understand it simply.

6. Which role should you choose?

• Novice Village : Start from the buyer side and feel the pulse of the market with a small amount of money

• Advanced version : Try to open a covered call strategy (hold spot + sell call)

• Career path : Either join the market maker team or become an arbitrage hunter

Important reminder : In the Bitcoin options market, 98% of sellers are institutions, while 80% of buyers are retail investors - don't use your hobby to challenge other people's ability to make a living !

7. Next Issue Preview

Tomorrow we will dismantle the Standardized Contract

After-school tasks :

1. Find two Bitcoin options with the same expiration date and different strike prices on Deribit and calculate their implied volatility difference

2. Observe the Tesla options chain to find out whether the most traded contracts are dominated by buyers or sellers

3. Leave a comment and share what type of options trader you want to be