> For the complete documentation index, see [llms.txt](https://docs.linora.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.linora.finance/trade/introduction-to-perpetual-options.md).

# Introduction to Perpetual Options

### What are Perpetual Options? <a href="#what-are-perpetual-options" id="what-are-perpetual-options"></a>

Perpetual Options are a novel new crypto derivative instrument that combines the risk-reward profile of options (protected downside with unlimited upside) with the simplicity of perpetual futures.

Perpetual options are:

<table data-view="cards"><thead><tr><th></th><th data-hidden data-card-cover data-type="image">Cover image</th></tr></thead><tbody><tr><td><p><mark style="color:blue;"><strong>Options that never expire</strong></mark></p><ul><li>Unlike traditional options that have a fixed expiration date, Perpetual Options can be held indefinitely, reducing expiry timing risk</li></ul></td><td><a href="/files/4xwlPci1h8611JRTJmga">/files/4xwlPci1h8611JRTJmga</a></td></tr><tr><td><p><mark style="color:blue;"><strong>Continuously funded instruments</strong></mark></p><ul><li>Instead of paying a large premium upfront, traders pay (or receive) a continuous funding rate based on market conditions to hold a position</li></ul></td><td><a href="/files/UAl39tidlXEW1k2exaC7">/files/UAl39tidlXEW1k2exaC7</a></td></tr><tr><td><p><mark style="color:blue;"><strong>Simplified derivatives</strong></mark></p><ul><li>They follow the same straightforward PnL structure as perpetual futures (entry price, exit price, funding)</li></ul></td><td><a href="/files/tcuLARmRXI0RD50TDu1k">/files/tcuLARmRXI0RD50TDu1k</a></td></tr></tbody></table>

### Why Trade Perpetual Options? <a href="#why-trade-perpetual-options" id="why-trade-perpetual-options"></a>

Perpetual options blend the upside of leverage with built‑in downside protection—so you can stay in a trade, without the constant threat of getting liquidated (by price).

In perp options, the extra funding also covers downside protection, so price swings are less deadly. In perp futures, funding simply pays for leverage.

<figure><img src="/files/FNdImj6sufRukR1z7fhm" alt=""><figcaption></figcaption></figure>

### Detailed Comparisons

{% tabs %}
{% tab title="vs Perpetual Futures" %}

|                           |                                                                     |                                                        |
| ------------------------- | ------------------------------------------------------------------- | ------------------------------------------------------ |
| Payoff Structure          | Non Linear and Asymmetric *(Accelerated Upside + Limited Downside)* | Linear and Symmetric *(unlimited upside and downside)* |
| Leverage                  | Variable leverage based on option delta                             | Fixed leverage based on margin                         |
| <p>Funding</p><p><br></p> | Lower liquidation risk (for buyers)                                 | Higher liquidation risk                                |
| Capital Efficiency        | May require less capital for similar exposure                       | Requires more capital to avoid liquidation             |
| {% endtab %}              |                                                                     |                                                        |

{% tab title="vs Dated Options" %}

|                 |                                   |                                          |
| --------------- | --------------------------------- | ---------------------------------------- |
| Expiration      | Never expire                      | Expire at a specific date and time       |
| Time Decay      | No time decay (theta)             | Value decreases as expiration approaches |
| Premium Payment | Paid continuously through funding | Paid upfront as a lump sum               |
| Liquidity       | Concentrated in fewer instruments | Fragmented across strikes and expiries   |
| Behavior        | Like a rolling 24-hour option     | <p>Fixed time horizon</p><p><br></p>     |
| Risk Management | No expiry mismatch with perps     | Require active management of expiry      |
| {% endtab %}    |                                   |                                          |
| {% endtabs %}   |                                   |                                          |


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