How can put debit spreads be used to hedge against cryptocurrency price volatility?

1 answers

• Torres HalseyJan 05, 2022 · 3 years ago
  Put debit spreads are a powerful tool for hedging against cryptocurrency price volatility. This options trading strategy involves buying a put option with a higher strike price and selling a put option with a lower strike price. By doing so, traders can limit their potential losses while still having the opportunity to profit from the price movements of the cryptocurrency. When the price of the cryptocurrency drops below the higher strike price, the put option provides a form of insurance, allowing traders to sell the cryptocurrency at a predetermined price. At the same time, selling the put option with a lower strike price helps to offset the cost of buying the higher strike put option. This strategy allows traders to hedge against price volatility and potentially generate income in the process.
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