How do strike price and exercise price affect the value of cryptocurrency options?

1 answers

• Teja mudhirajFeb 09, 2021 · 4 years ago
  Strike price and exercise price are critical components that impact the value of cryptocurrency options. The strike price represents the predetermined price at which the option can be exercised, while the exercise price is the actual price at which the option is exercised. The relationship between the strike price and the market price of the underlying cryptocurrency determines the option's intrinsic value. When the strike price is lower than the market price, the option is in-the-money and has value. Conversely, if the strike price is higher than the market price, the option is out-of-the-money and has no intrinsic value. The difference between the strike price and the market price affects the option's profitability and the likelihood of exercise. A larger difference may make the option less attractive to exercise, as the potential profit is reduced. On the other hand, a smaller difference increases the chances of exercise. Additionally, the strike price also influences the premium of the option. Generally, options with lower strike prices have higher premiums. Therefore, strike price and exercise price are important factors to consider when assessing the value and potential returns of cryptocurrency options.
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