Deribit is an exchange where cryptocurrency options and futures contracts can be traded. The company that operates this platform is called Deribit B.V., founded in 2016 and based in Amsterdam, The Netherlands.

The founders of Deribit are former traders and cryptocurrency enthusiasts who have decided to create a trading platform for professionals that will be better prepared to deal with system overloads (for example, the competitive BitMEX platform often “freezes” due to system congestion).

Platform founder John Jansen (CEO) is a former options trader. He worked at the Amsterdam Stock Exchange, but he has been around with the idea of ​​setting up his own exchange especially for cryptocurrency options since 2014. Because trading platforms require hundreds to thousands of orders per second to process, the development of a stable version of Deribit lasted over two years. In the near future, Deribit will be able to handle up to 50,000 exchange orders per second.

John’s brother Marius Jansen is an experienced cryptocurrency trader who has been trading Bitcoin since 2013. He finished trading in 2017 and joined the Deribit team.

Deribit works as an unregulated option broker, but this is not because the stock exchange is trying to evade regulation. European financial regulators have not yet prepared legislation that could incorporate cryptocurrency option platforms.

Deribit is an exchange where cryptocurrency options and futures contracts can be traded. The company that operates this platform is called Deribit B.V., founded in 2016 and based in Amsterdam, The Netherlands.


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Futures, options and perpetual contracts

Three financial instruments are traded on Deribit: perpetuals, futures and options.

Futures are simply agreements between users to buy or sell cryptocurrencies in the future at a price that is set today. Depending on when the contract is to be settled, today’s price is different from the future. Futures 90D (90 days from today) can work with a totally different price than the price of the cryptocurrency today.

Perpetuals contracts are similar to futures, but they trade very close to the current price of the underlying cryptocurrency. Moreover, it never expires. It is a special type of contract that is suitable for trading on leverage.

There are two types of options: call options and put options. Call options give their holder the option (but not a commitment) to buy the underlying cryptocurrency for the so-called “strike price”. Put options give the buyer an option (but not a commitment) to sell the underlying cryptocurrency for the “strike price” at either the expiration date or before the expiration date.

Two parties, buyers and sellers, always participate in the option. The seller receives the so-called “option price” at the moment of the (sale), which is not returned later. The “option price” is determined using the Implied Volatility Indicator (IV), which is a market estimate of the underlying cryptocurrency volatility during the time period before the option expires. Why are trader options attractive?

  • Speculants can make money on the underlying cryptocurrency if it moves in price in their direction and cannot lose more than the “option price” they paid in the beginning
  • Option sellers earn an “option price” and can accurately adjust their risk.

Options as the main product of Deribit

The main attraction for professional traders are bitcoin options. Deribit is the only platform that offers cryptocurrency options trading without requiring astronomical deposits from the user.

While platforms such as CBOE or LedgerX allow you to trade bitcoin options, the trader must go through verification of his identity and deposit a large sum in the fiat currencies.

At the same time, Deribit is the only platform that offers a wide range of cryptocurrency options for which there is sufficient liquidity on the exchange.

You can trade weekly, monthly, quarterly, and half-year options.

All market positions are “calculated in Bitcoins” and the settlement takes place by crediting or debiting Bitcoin from your trading account.

Exchange fees

Trading fees are often one of the most important factors that determine which trading style will be optimal for the platform. Like most of the similar exchanges, Deribit works with a “maker-taker” model.

“Maker-taker” means that Deribit distinguishes between bringing liquidity to the market and taking it off. Accordingly, you will pay an additional fee (Taker Fee) or you will get a discount on the transaction (Maker Fee). The dispersion of these charges ranges from -0.02% to 0.05%.

Fees

How to register

Click “CREATE ACCOUNT” button when you open the Deribit main page. A table opens where you enter your email, username, password, and where you reside.

Registration

After submitting the data, Deribit will send you a confirmation link to the email. Once you have created your account by clicking the link, the account is fully activated and you can start using it.

We strongly recommend you to activate two-step authentication using Google Authenticator.

Deribit Testnet

Before we advance to the exchange description, we also recommend you to make an account on Deribit Testnet. It is a full-featured copy of the platform where you don’t operate with real Bitcoins. Testnet is especially suitable for newcomers to try the exchange without risking any real equity.

After you register, you get 10 fake Bitcoins and you can trade them the same way as if you were trading real money. The testnet also helps you with navigating through the interface of Deribit.

You can find the testnet here.

Exchange interface

Compared to other futures and options exchanges, Deribit has a user-friendly environment. The layout is sophisticated and full of advanced tools, but still remains simple.

The user has the ability to create a number of sub-accounts and, if necessary, to trade them in isolation or to share risk among multiple sub-accounts.

After signing up, the exchange looks like this:

Deribit main view
  1. In the upper bar you can see the basic overview: Bitcoin price, value of all assets in your account, available Bitcoins, platform status and current time.
  2. In the left menu you will find a switch between futures and options, account settings, extensive documentation covering all exchange functions and insurance fund information that exists in case of bankruptcy.
  3. The market and position overview occupies the biggest part of the screen, you can switch between futures, options, graphs and your account summary

Trading options

After clicking on the “BTC Options” button, a table appears that shows available options with all the important details such as expiration date, option type, or strike price.

If you are looking for a specific option, you can either search it by using the filter in the top right corner or find it in the list and click it directly.

If you click on the selected option in the Market Overview, the order form will appear with additional information:

Order form
  1. At the top, there is an identification of the option contract showing the expiration date, strike price, and option type. You can still change all identifiers here and switch to another option overview.
  2. The order is entered here, you can use the Market or Limit order, or choose a more complex assignment, including IV (Implied Volatility).
  3. The orderbook shows all orders placed by other traders.
  4. In these two tabs, you will find an option price chart and a listing of recent trades that have been made for that option.

Trading futures and perpetuals

If you’ve ever worked with competing futures exchanges, such as BitMEX, futures trading will be more intuitive to you than options:

Trading futures and perpetuals
  1. At the top, there is an identification of the option contract showing the expiration date, strike price, and option type. You can still change all identifiers here and switch to another option overview.
  2. The order is entered here, you can use the Market or Limit order, or choose a more complex assignment, including IV (Implied Volatility)
    The orderbook shows all orders placed by other traders.
  3. In these two tabs, you will find an option price chart and a listing of recent trades that have been made for that option.

Order types

Market & Limit

Market and Limit are the most commonly used order types that are immediately placed in the order book. Market orders are placed at the current market price, order limits are placed in the order book and are waiting for a suitable counterparty to be found.

Stop

So-called “stops” does not appear in the order book immediately after entering the system. “Stops” are associated with stop prices. You determine the “stop price” yourself and as soon as the price of the derivative reaches the specified “stop price”, a pre-defined order is placed in the order book. Normally, the “stop” is used as a “stop loss”.

How to send Bitcoin to the exchange

Deribit does not support fiat currencies, so you will need to buy your own bitcoin somewhere else first. You can buy it on any other exchange for that purpose, such as Bitstamp or Coinbase.
Once you have Bitcoins ready, send them to Deribit by clicking the Deposit button in the drop-down menu at the top right of the screen. The Bitcoin address where the BTC will be deposited to is displayed here:

Send BTC to Deribit exchange

Deribit requires only one transaction confirmation on blockchain to credit the transaction. This means that your Bitcoins will be credited faster than elsewhere, because most competitors require at least three blockchain confirmations and you can wait up to an hour to get the Bitcoins.

How to withdraw Bitcoin from Deribit

If you decide to withdraw Bitcoins from the exchange for any reason, the procedure is very similar. Click on the “Withdraw” button in the same menu. A form appears in which you enter the address of your BTC wallet, the number of BTCs sent, and the priority you want to assign. The higher the priority, the greater the transaction fee. Deribit, however, does not charge any withdrawal fees or deposits, it is only the fees of the Bitcoin blockchain itself.

Withdraw BTC

The withdrawal of Bitcoins is done manually by Deribit employees, and they may run out of money on their regular Deribit wallets (remember that 95% of Bitcoins are stored at addresses without Internet access) and must go to the bank to use the vault addresses.

The security of Deribit

A complex security of the exchange is an essential requirement for a trader. So far, Deribit has not been a target of a successful hacker attack, and we can be 100% sure that someone has already tried it. This does not mean that Deribit is immune to attacks, but seems to have well-established and effective security management.

95% of all coins sent to Deribit by users are placed on hardware wallets that are stored in bank safes without the internet access.

Deribit tests each system update with its bounty program. So-called “white hackers” are immediately looking for bugs in the updates and if they manage to break into the system, they get a reward in exchange for exploiting the security deficit.

From the user’s perspective, the platform uses classic security forms, such as the ability to perform two-step authentication, block unknown IP addresses, and set the time to ask for a password again.

Deribit mobile app

If you are a trader who cannot spend the whole day in front of a computer, you will certainly not despise the mobile app. Deribit has a native application for iOS and Android devices.

You connect the application to your account using a two-way API key. In my opinion, this is not an appropriate solution, because the API key can be easily misused.


>> Go to Deribit website