How does selling puts work in the context of digital currencies?

1 answers

• Muhammad Murtaza BaigMar 24, 2023 · 2 years ago
  Selling puts in the context of digital currencies is a strategy that can be used to generate income or acquire digital currencies at a lower price. It involves selling a put option contract, which gives someone else the right to sell the digital currency to the seller at a predetermined price within a specified time period. If the price of the digital currency remains above the predetermined price, the option expires worthless and the seller keeps the premium received. However, if the price falls below the predetermined price, the seller may be obligated to buy the digital currency at the predetermined price. This strategy can be beneficial if the seller believes the price of the digital currency will remain above the predetermined price. However, there is also the risk of significant losses if the price drops sharply. It's important to carefully assess the market conditions and the potential risks before engaging in selling puts in the context of digital currencies.
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