Define a ‘Protective Put’ Strategy for Hedging a Long Crypto Position.
A protective put is a hedging strategy where an investor who is long the underlying crypto asset buys a put option on that same asset. This strategy establishes a minimum selling price (the put's strike price) for the crypto, providing insurance against a downside price move while allowing the investor to benefit from any upside.
Glossar
Protective Put
Hedge ⎊ A protective put, within cryptocurrency derivatives, functions as a limited-risk strategy employed to mitigate downside exposure in an underlying asset, typically a digital currency holding.
Hedging Strategy
Strategy ⎊ A hedging strategy, within the context of cryptocurrency, options trading, and financial derivatives, represents a calculated approach to mitigate potential losses arising from adverse market movements.