What Is the Difference between a Perpetual Option and a Standard Option?
A perpetual option is a theoretical financial derivative that has no expiration date, giving the holder the right to buy or sell the underlying asset at the strike price forever. Standard options have a fixed expiration date.
Perpetual options are primarily used in academic modeling, while standard options with fixed expirations are the norm in actual financial markets.
Glossar
Standard Options
Call ⎊ Standard options include call options, which grant the holder the right to purchase an underlying asset at a specific strike price on or before the expiration date.
Perpetual Options
Innovation ⎊ Derivative instruments that lack a fixed expiration date allow for continuous exposure to volatility without the need for rolling positions.
Perpetual Option
Concept ⎊ A Perpetual Option is a novel derivative concept that grants the holder the right, but not the obligation, to buy or sell an underlying cryptocurrency at a specified strike price without a fixed expiration date.
Fixed Expiration
Constraint ⎊ Fixed expiration defines a precise, predetermined date and time when a derivative contract, such as a traditional futures or European-style option, ceases to be valid and must be settled.
Theoretical Price
Pricing ⎊ Theoretical Price is the calculated fair market value of a derivative instrument, such as a futures contract or an option, derived from a no-arbitrage principle using a foundational financial model.
Underlying Asset
Futures Pricing incorporates the cost of carry, which in crypto markets includes funding rates derived from perpetual swap markets and the time value associated with holding the spot asset.