Define the Two Basic Types of Options Contracts.
The two basic types are call options and put options. A call option gives the holder the right to buy the underlying asset at the strike price.
A put option gives the holder the right to sell the underlying asset at the strike price. Call options are typically bought by those expecting a price increase, while put options are used by those expecting a price decrease or for hedging purposes.
Glossar
Right to Buy
Exercise ⎊ The ‘Right to Buy’ within cryptocurrency derivatives contexts denotes an option holder’s prerogative to acquire an underlying asset at a predetermined price on or before a specified date, mirroring traditional financial options but applied to digital assets or synthetic representations thereof.
Right to Sell
Exercise ⎊ A right to sell, within cryptocurrency derivatives, represents a contractual obligation granting the holder the authority, but not the requirement, to divest an underlying asset at a predetermined price on or before a specified date.
Underlying Asset
Foundation ⎊ The concept of an Underlying Asset, within cryptocurrency derivatives and financial markets, establishes the core reference point for valuation and risk transfer.