Over the last couple of years, the term cryptocurrency has gained a lot of public attention. More and more people are using cryptocurrency in order to control the distribution and creation of money. However, all financial transactions are accompanied by risks, and cryptocurrency is not an exception. In fact, most of the investors now are using trading platforms to do transactions without being able to control the risks. Understanding this problem, Sparrow is the leading options trading platform which provides users with the simplest way to control risk and monetize your digital assets. Their revolutionary platform is expected to enable users to trade options that are settled by smart contract.
What is Sparrow?
Sparrow is an option trading platform which is created with the aim to create a 24/7, secure and reliable place for traders to control their risk as well as supply simple tools and secure engine for users’ specific needs.
With the vision of giving the world the confidence to trade anything, Sparrow wants to serve their users with easy and safe tool so that these participants can make use of their tools like the professionals do.
What is option trading? Sparrow Option?
An option trading is a contract that allows (but doesn't require) an investor to buy or sell an underlying instrument like a security, ETF or even index at a predetermined price over a certain period of time. Buying and selling options is done on the optionsmarket, which trades contracts based on securities.
This is one of the most common types of trading in stock market or forex market. With option trading, traders can control and manage risks very well. Applying this form of trading effectively, 90% of you will not lose capital.
In Option trading have 2 options:
– Call Option: Buyers of calls and Buyers of puts
– Put Option: Sellers of calls and Sellers of puts
The buyer of option must pay the seller a transaction fee (option premium)
Sparrow Options give you the power to protect your digital assets through the TradePROTECT product (traditionally called buying an option), or receive Instant Premium on your digital assets through the use of the TradeBOOST product (traditionally called selling an option). Sparrow Options are transparent, customizable, and simple products that aim to bring risk control using options to a wider audience.
In Sparrow, buy an option is tradePROTECT and sell an option is tradeBOOST
Main functions in Sparrow
1.TradePROTECT
TradePROTECT is what we call buying an “out-the-money, European, covered option”. The buyer pays a non-refundable Instant Premium to obtain the right (not an obligation) to trade a particular digital asset at the end of a specified period for a specified strike price. As TradePROTECT is a covered option, this means there is no counterparty risk. It is the ideal instrument to protect digital assets against adverse market conditions.
You pay Instant Premium to buy a right to trade.
Example about buy a call option at tradePROTECT:
You have USDT and you want to buy ETH (currently priced at $ 300). You realize that if it surpass the resistance of 360 $, the ETH will continue to increase. You will set an option to buy at $ 360 (Strike Price = $ 300), select the settlement date of “Settlement Date contract” - for example, 11 days, the amount of purchase = 10 ETH (Amount Protected = 10). You pay Instant Premium to buy a right to trade.
If after 11 days to the end of the contract. ETH breaks the $ 360 barrier and increases to $ 460, you will be entitled to buy 10 ETH for only $ 360. If ETH price is below 360 $, you can buy ETH at market price or no longer buy.
Buy a call option like a conditional Order. When Break price from 360 $ will buy ETH immediately with market price. If the price of ETH continues to increase, it is very good but when meeting Fake Break and the price decreases, our Order has been matched. But with buy a call option of TradePROTECT at Sparrow, we can not buy anymore or buy at current market price (lower than 360 $)
Example about buy a put option at tradePROTECT:
In contrast to buy a call option, for example, you have 10 ETH and ETH are priced at $300. You see that if the price falls through the $240 support, the ETH will continue to fall sharply. You will set buy a put option at the price of $ 240 (Strike Price = $ 240), select the settlement date of “Settlement Date contract” - for example, 11 days, the amount of sale = 10 ETH (Amount Protected = 10). You pay Instant Premium to buy a right to trade.
If after 11 days to the end of the contract. ETH dropped from the support of $ 240 and dropped deeply to $ 140, you will be entitled to sell ETH for $ 240 as a contract. If ETH price is over $ 240, ETH can be sold at market price or no further sale continues Hold.
2.TradeBOOST
TradeBOOST is what we call selling an “out-the-money, European, covered option”. This means the seller collects a non-refundable Instant Premium in return for selling the right (not an obligation) to trade a particular digital asset at the end of a specified period for a specified strike price. As TradeBOOST is a covered option, this means the seller would need to pledge 100% of the underlying digital asset. It is the ideal instrument to monetize digital assets when the market is quiet or if you have a longer-term view with short-term expenses to fulfill.
You collect Instant Premium to sell a right to trade.
Example about sell a put option at tradeBOOST: You received Premium Fee
You are Miner and you have 10 ETH, the price of ETH is at $ 300. If you think that ETH has increased to the $ 360 barrier, you don't want to sell ETH, but you need money to pay for the electricity. You will using tradeBOOST to sell a put option to another person at the price of $ 360 (Strike Price = 360 $), select the settlement date of "Settlement Date contract" - for example, 11 days, the amount purchased = 10 ETH (Amount Protected = 10). You will receive a Premium Receivable amount to pay your electricity bill.
If after 11 days to the end of the contract. ETH goes up to $ 355, you still have 10 ETH and received a premium fee instead of selling ETH at $ 300 to pay for electricity, but if ETH breaks the $ 360 barrier and goes up to $ 460, you are required to sell the ETH for $ 360 because you have received a premium fee to sell a put option to others - the buyer has the right to decide to execute the sell order at $ 360.
Example about sell a call option at tradeBOOST: You received Premium Fee
ETH is priced at $ 300. You consider that ETH cannot be reduced to $ 240 support, so you using tradeBOOST to sell a call option to another person to get an premium fee at $ 240 (Strike Price = $ 240), choose the date of Settlement Date contract liquidation - for example 11 days, the purchase amount = 10 ETH (Amount Protected = 10).
If after 11 days to the end of the contract. ETH is no less than 240 $, you will receive the premium fee, but if ETH decreases by 240 $ and down to 140 $ then you must buy ETH for 240 $ because you have received a premium fee to sell a call option for others - buyers have the right to make a buy order at $ 240.
3.ConvertNOW Facility
This function is understood as SWAP, which means you convert back the supported currencies at Sparrow right at the current value. Sparrow's ConvertNOW Facility takes place immediately and is absolutely free.
4.SP Dollar và SPO token:
In Sparrow's ecosystem, there are 2 parallel currencies that exist: SP Dollar and SPO token.
Sparrow Dollar (SP $) is Sparrow's payment unit, which makes it easy for traders to understand the value of any Sparrow option and to compare contracts. SP $ can only be used on Sparrow and will not be transferred or used outside Sparrow.
Sparrow token (SPO) is the token ERC-20 running on the Ethereum platform. SPO will be required to pay transaction fees, withdrawal fees and platform listing fees. A total of 1.4 billion SPO will be released.
Using SPO token will be:
-Transaction discount: Users can enjoy attractive discounts by paying with SPO. Discounts are now set to 50% of transaction fees.
-Token Burning: Every quarter, Sparrow plans to burn up to 50% of the transaction revenue received on the Sparrow platform until it burns 50% of the total amount of SPO released.
The advantages of Sparrow
Firstly, with Sparrow Exchange, users will easily control risk and boost their returns. With just several simple clicks, everyone can buy or create an option. People will have amazing user experience with simplified tools and a pricing engine driven by machine learning to provide them with the best price every time.
Moreover, as a full – featured, customizable and highly liquid options trading platform, Sparrow Exchange can attract a variety number of users, both retail and institutional traders.
Sparrow is the first option trading platform in the cryptocurrency. It will be a great advantage if organized traders enter this market. At that time, what do you think the value of SPO will be?
Sparrow has forged Strategic Partnerships with renowned organizations such as: Signum Capital, LuneX Ventures, Arrington XRP Capital, Kyber Network, Hyperchain Capital, Digital Currency Holdings, Du Capital, The Yozma Group, QCP Capital, 256 Ventures, Jubilee Capital, and XSQ. It is very impressive in the context of startup projects difficult to attract capital because of the abundance of scam projects. This is also a big plus for the project.
The challenges for Sparrow
Apart from the potentials we already talked about, there are still some disadvantages that Sparrow Exchange has to overcome to succeed.
First of all, for a long time, users have been familiar with other trading platforms, the emergence of an options trading platform may be quite new for them. Call options and put options sometimes can make users confusing and hesitate to try options trading platform.
Besides, in the current context, there are many popular trading platforms as well as ICO projects which are very popular among people. These platforms could become very strong competitors, which creates many difficulties for Sparrow Exchange team. Perhaps their team will have to make great efforts to persuade people to use their product.
Conclusion
In general, we can say that Sparrow is a very promising project providing users a simple and secure trading platform. Using Sparrow, investors who don’t have much experience or time can easily control their money without the risks. It can be said that Sparrow has many advantages to succeed. With their team and partners, they are expected to prove that options are the perfect solution for cryptocurrencies.
Infomation about Sparrow:
Website: https://sparrowexchange.com
Medium: https://medium.com/sparrowexchange
Telegram: https://t.me/SparrowExchange
Telegram VN: https://t.me/SparrowExchange_Vietnam
This article belongs to Syndicator