What Is Perpetual Options?
Perpetual options (also called everlasting options) are options contracts that never expire. They combine the expiration-free nature of perpetual futures with the asymmetric payoff profile of traditional options. Like perpetual futures use funding rates to anchor to spot, perpetual options use a funding mechanism to maintain their theoretical value relative to a Black-Scholes-equivalent price.
How Perpetual Options Works
The funding mechanism for perpetual options works similarly to perpetual futures: holders of perp options pay a periodic funding rate that reflects the difference between the mark price and the theoretical intrinsic value. This funding rate replaces time decay (theta), meaning the cost of holding the option is spread over ongoing payments rather than a declining premium approaching expiration.
Why It Matters for Traders
Perpetual options solve a major problem for crypto traders: the need to constantly roll expiring options positions. Instead of buying monthly options and rolling them before expiry (incurring spread costs each time), a perpetual option provides continuous exposure. This makes hedging simpler and more capital-efficient. As the perpetual options market matures, it could become the preferred instrument for portfolio protection and volatility trading in crypto.