Z2O - Decentralized Options

Introduction and Opportunity

Options are one of the most popular derivatives in traditional markets among institutional and retail investors. Due to their versatility, traders use options to hedge existing positions, speculate on a security's directional moves, or generate income.

In 2021 alone, 33.3b options contracts were traded, up 35% from 2020. Much of this growth can be attributed to retail traders, who now account for 25% of option trading volumes. These retail traders were drawn to options in 2020 when a combination of COVID-19 lockdowns, stimulus checks, and a bullish stock market became the perfect storm for encouraging option activity. This growth of equity options presents a significant opportunity for crypto options, which have yet to see the same level of traction.

In fact, crypto options are underutilized by most measures. According to the CBOE, the total notional value of options volume is roughly $550b per month. This is more than twenty times the notional value of Bitcoin and Ethereum options volume, which is roughly $23b per month, according to Coinglass.