Key highlights:

  • Binance unveiled options on over 1,000 U.S. stocks and ETFs
  • The product is long-only, so users can buy calls and puts but not write options
  • The offering will not be available to users based in the United States

Binance announced that it is launching physically settled options on over 1,000 U.S.-listed stocks and exchange-traded funds. The product went live on September 1 and is available to eligible users outside the United States.

Binance's new options product features

The new product would settle physically, unlike derivatives that pay out cash based on price movement. This means when a contract is made, the user would receive or deliver the underlying shares instead of getting the difference in value paid out. 

For example, a successful call option turns into an equity position in the same account, rather than a cash gain.

The offering runs through two brokerage partners. Nest Trading Limited would be the introducing broker that handles the interface users interact with. Then, U.S.-registered Alpaca Securities manages execution, clearing, settlement, and custody. It would also hold the resulting shares once contracts are exercised.

Binance's Head of Exchange and Trading, Shunyet Jan, said in the release that the launch is part of efforts the exchange is making to be a complete trading platform.

"Stock options are an important next step in Binance's evolution into a fuller multi-asset platform," Jan said. "...we are expanding the tools available to users who want to participate in equity markets, manage exposure, and access strategies that have historically been offered through traditional brokers, all from one Binance account."

The new offering comes with some limits

Binance has set particular parameters for the product. Trading is long-only at launch, which means users can buy calls and puts, but can't write options or take on short positions. 

This helps to keep risk contained, since the maximum a buyer can lose is limited to the premium paid upfront for the contract. A contract can still expire worthless if the share price does not move enough before the expiration date.

Users can only place limit orders for now. Essentially, traders have to specify the exact price they are willing to pay. Users also need to complete an options suitability questionnaire and sign a disclaimer before they can start trading.

Binance is growing its reach into TradFi

This launch builds on a series of moves the exchange has made in the past year to expand beyond crypto trading. In June, Binance launched trading for over 7,000 U.S. stocks and ETFs for customers outside the United States.

That was followed by the launch of bStocks in July. It offers tokenized securities that can convert one-to-one into the underlying shares, and cash-settled options on gold and silver.

Interest in these kinds of products has also grown. Trading volume for equity-linked and other tradFi derivatives reached around $433.4 billion in August, which is 15 times the $29.5 billion seen in January. 

In another development, Binance launched its Agent OS to allow users to use AI agents to analyze markets and place trades. This highlights the exchange’s aim to expand the services it provides its users.