Differentiate between a ‘Call Option’ and a ‘Put Option’.
A call option gives the holder the right, but not the obligation, to buy the underlying asset at the strike price before or on the expiration date. Buyers of calls expect the price to rise.
A put option gives the holder the right, but not the obligation, to sell the underlying asset at the strike price before or on the expiration date. Buyers of puts expect the price to fall.
They represent opposing views on the future price movement.
Glossar
Strike Price
Reference ⎊ The Strike Price is the predetermined reference level set at the contract's inception against which the underlying crypto asset's spot price is compared at expiration or exercise.
Decentralized Exchange
Exchange ⎊ A decentralized exchange (DEX) facilitates peer-to-peer cryptocurrency trading without intermediaries, operating autonomously on blockchain networks.
Put Option
Insurance ⎊ Purchasing a Put Option functions as a form of portfolio insurance, establishing a guaranteed minimum selling price for the underlying crypto asset.
Call Option
Upside ⎊ Acquiring a Call Option provides leveraged upside participation in the appreciation of a specific cryptocurrency asset.
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.