What are crypto options?

As a financial expert, I often encounter questions related to emerging financial products. One such query that often arises is, "What are crypto options?" Crypto options, simply put, are financial derivatives that allow investors to speculate on the future price movements of cryptocurrencies without having to actually own the underlying asset. They grant the holder the right, but not the obligation, to buy or sell a specific amount of a cryptocurrency at a pre-determined price, known as the strike price, on or before a specified expiration date. Crypto options are seen as a tool for hedging against price fluctuations or for generating profits from correct predictions of market movements. However, they also involve significant risks, and investors should exercise caution before trading in crypto options.