A new trading product from Hxro (pronounced “hero”) and leading derivatives exchange FTX bets that retail cryptocurrency traders would play the options markets if only trading options were a simpler ordeal.
In partnership with FTX, Hxro built its product TixWix to target a “global retail audience” of would-be crypto options traders by distilling complex market data in a format familiar to anyone who uses other prediction and betting platforms for sports, politics, etc., CEO Dan Gunsberg told CoinDesk.
Hxro entered the cryptocurrency trading market in March 2019 with its gamified binary futures product MoonRekt, as CoinDesk reported, which launched to a waiting list of more than 100,000 users. Since starting the company, Hxro’s co-founders Gunsberg and Rob Levy have relied on their prior careers as traders in traditional markets to design novel products for crypto traders.
Their new product, announced Wednesday, leverages FTX’s back end to support an options trading interface that abstracts away the “complexities of non-linear risk factors” and “complexity around the Greeks,” Gunsberg said, referring to common measures of risk – delta, theta, gamma and rho – plus a Greek-sounding term, vega, used by options traders.
Instead of an otherwise complicated options contract with a 5% chance of expiring at a given price, for example, TixWix serves the same trade as a simple bet with 20-to-1 odds, Levy explained.
At launch, the new product supports bitcoin and ether markets with two types of bets: Tix, a bet that the market will close above a certain price by a given date, and Wix, a bet that the price will touch a certain price at some point before a given date.
TixWix is the first instance of FTX serving as a back-end provider, CEO Sam Bankman-Fried told CoinDesk. His exchange already has experience offering with betting and prediction markets, however, with its increasingly popular U.S. presidential election markets that have seen record volumes ahead of the Nov. 3 event.
More broadly, TixWix is a bet by both teams on the future growth of the general cryptocurrency options market, Levy told CoinDesk. “There’s enormous upside for options trading products in crypto. Options are an extremely powerful, useful tool.”
The size of options trading in traditional markets is one reason Levy expects significant growth in crypto options. “The explosion of stock options that we’ve seen in legacy markets is about to be seen in crypto,” Levy said. “You need liquidity for that to happen, and we’re starting to see real liquidity come into crypto.”
With the crypto options market set to balloon, Hxro and FTX plan to make it easily playable even by amateur traders through “livestreaming simplified market odds” on TixWix.