Nasdaq to list options for Coinbase stock

Exchange giant Nasdaq is set to list options contracts for Coinbase stock.

The listing will take place on Tuesday, a Nasdaq representative told Reuters on Monday. Stock options give traders the right, but not the obligation, to buy or sell a stock at an agreed-upon price and date.

There are two types of options: puts, which is a bet that a stock will fall, and calls, which is a bet that a stock will rise.

Options trading has exploded in recent months, reportedly thanks to the coronavirus pandemic and commission-free trading offered by popular mobile investing apps like Robinhood.

While options can provide substantial profit opportunities as they offer leverage, they can be risky if the predicted price change does not occur before their expiry date. Risk, however, is limited to the premium paid for the option.

Coinbase went public on Nasdaq last week. Its share price has been volatile in the range of $310 and $430. Coinbase closed at $333 on Monday.

Contributed by The Block.