Price levels determine the value of your option.
On Dream, the price level represents the target price you want BTC to be above by the time your option expires.
When you trade Dream Options, think of the price level as the anchor price of your trade.
At Expiration
If the price of BTC is above your price level, your option is in the money (ITM).
If the price of BTC is below your price level, your option is out of the money (OTM) and expires worthless ($0) due to Time Decay.
You want BTC to close above your price level when your option expires.
Profit and Loss
You do not need to wait until expiration to sell. The value of your option can increase before expiration as BTC’s price moves closer to your price level.
As BTC rises, the odds of BTC exceeding your price level also go up, making your option more valuable to other traders. This means you may be able to sell for a profit before it expires.
If you decide to sell your option before it expires, another trader may be willing to pay more for it. This allows you to profit from price movement without needing to wait for expiration.
Key Factors
The higher BTC moves above your price level, the faster your option gains value.
The lower BTC moves below your price level, the faster your option loses value.
You can still profit even if BTC is below your price level, as long as you sell it for more than you paid before it expires.
Options are a double edged sword. They amplify both reward and risk, but your maximum loss is limited to the cost of the option.