Distinguish between a ‘Call Option’ and a ‘Put Option’.
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 buyers profit from a rising price, while put buyers profit from a falling price of the underlying asset.
Glossar
Option Seller
Strategy ⎊ The Option Seller, within cryptocurrency derivatives, fundamentally assumes a short position, profiting from a decline in the underlying asset's price or volatility.
Options Strategy
Framework ⎊ Options strategies within cryptocurrency derivatives represent a structured approach to managing risk and generating returns, leveraging the unique characteristics of digital assets and their associated options contracts.
Underlying Asset
Futures Pricing incorporates the cost of carry, which in crypto markets includes funding rates derived from perpetual swap markets and the time value associated with holding the spot asset.
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.
Profit Potential
Attainment ⎊ Profit Potential in derivatives trading is derived from the ability to employ leverage, hedge existing exposures, or speculate directionally on future price movements with a relatively small initial capital commitment.
Right to Sell
Exercise ⎊ A right to sell, within cryptocurrency derivatives, represents a contractual obligation granting the holder the option, but not the requirement, to divest an underlying asset at a predetermined price on or before a specified date.