Binance adds covered calls and cash-secured puts to stock options

Binance announced covered calls and cash-secured puts on 15 October, extending its US stock-options service into writing options against existing shares or reserved USDC. The change lets eligible users collect a premium in exchange for accepting a future obligation to sell or buy the underlying shares at the strike price.[1]

Analysis: the commercial opportunity is to keep the equity holding, option overlay and funding balance in one customer relationship. The immediate customer constraint is committed capital: the premium does not extinguish the option seller’s future delivery obligation.[1]

Two strategies, two forms of committed capital

The short-strategy FAQ reserves collateral when the order is entered, before a fill. Cancelling an unfilled order releases it. Filled positions retain the backing; premiums and the assigned equity leg settle on T+1.[2]

Illustration: assume one put on 100 shares, a $50 strike and a $2-per-share premium. It commits 5,000 USDC and produces a gross $200 premium. If assigned when the stock is worth $40, the customer pays $5,000 for shares worth $4,000: the premium reduces the economic loss to $800 before fees and taxes. These are hypothetical prices, not a quoted Binance contract or return.[8][1]

A covered call exchanges some potential share-price upside for the option premium. If the stock rises above the strike and the call is assigned, the shares leave at the agreed price. If the stock falls, the investor still bears the loss on the shares, cushioned only by the premium. That is why the word covered describes delivery backing, rather than protection of the investment’s market value.[7]

Closing uses different funding paths

Buying back a call requires available USDC for the closing premium and fees; frozen shares cannot pay them. For a put, released collateral pays the closing cost first, with additional USDC needed for any shortfall. Partial fills release collateral proportionately.[2]

Analysis: a rally can leave a call writer holding valuable shares while needing extra cash to buy the option back. The decision to close therefore depends on available funding as well as the option price. Equal premium values do not imply equal cash requirements.

On expiry day, new short exposure stops at 3:15 p.m. Eastern Time, or 3:30 p.m. for contracts trading until 4:15 p.m. Short positions are not automatically closed at expiry; American-style options can also be assigned early, including overnight.[2]

Corporate actions can change the strike, multiplier or deliverable. Adjusted contracts become close-only, and the collateral check treats shares and cash separately. An excess of one cannot cure a shortage of the other.[2]

Securities remain within a broker and custodian structure

Nest Trading Limited introduces and routes orders to Alpaca Securities LLC for execution, clearing, settlement and custody. The securities terms describe an omnibus account in Nest’s name for customers; client identifiers track positions without creating individual legal brokerage accounts at Alpaca. This identifies the parties responsible when option settlement becomes a shareholding.[5]

The options contract excludes US persons, people located in the United States and accounts they beneficially own or control. It also identifies potential restrictions in China, Hong Kong, the European Union and other prohibited jurisdictions. Product availability therefore depends on the customer’s eligibility, rather than the US listing of the underlying shares.[4]

The general FAQ requires an options suitability quiz and signed disclaimer. Trading follows US options sessions, and only limit orders are supported. Its free quotes are delayed by 15 minutes; real-time OPRA data requires activation. For a short-option order, a displayed price and a presently executable price can consequently be different.[3]

The commission is only one part of the published price

Binance’s 14 September promotion, effective from 1 September until further notice, quotes $0.60 per contract and waives platform and exercise fees. It separately lists an Options Regulatory Fee of $0.015 and an OCC charge of $0.025 per contract on buys and sells, plus sell-side SEC and FINRA charges and a CAT charge based on equivalent shares. The notice specifies upward cent rounding for regulatory fees.[6]

At that promotional commission, opening and later buying back ten contracts costs $12 in commission alone. The option premium, the listed additional charges and any taxes are separate. USDC/USD conversion carries no fee or spread to the customer under the notice; obtaining USDC through another asset conversion is a different transaction.[6]

The same options terms state no separate commission, while the later promotion quotes one. The FAQ’s linked fee page retrieved on 20 October showed direct-equity charges rather than an options schedule. A current order quote and reconciled contract are needed to establish the applicable price.[4][6][10]

The securities terms also disclose a Binance group minority shareholding in Alpaca and a share of Alpaca’s payment-for-order-flow revenue. They retain Nest’s best-execution duty and describe execution-quality reviews. This means the platform’s economics include the routing relationship as well as the visible customer tariff; the disclosure alone does not measure the quality of an individual fill.[5]

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