How does a long put option work in the world of cryptocurrency?

1 answers

• May 03, 2022 · 3 years ago
  In the world of cryptocurrency, a long put option allows investors to profit from a decline in the price of a specific cryptocurrency. Let's say you believe that the price of Ethereum is going to drop in the next month. You can purchase a long put option that gives you the right to sell a certain amount of Ethereum at a predetermined price. If the price does indeed drop below that price, you can exercise the option and sell your Ethereum at a higher price than the market value, thus making a profit. However, if the price remains above the predetermined price, the option expires worthless and you lose the premium you paid for it. It's important to carefully consider the risks and potential rewards before engaging in options trading in the cryptocurrency market.
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