How Can a Crypto Option Be Used for Downside Protection? ▴ Learn

How Can a Crypto Option Be Used for Downside Protection?

A crypto option can be used for downside protection by purchasing a put option. Buying a put option gives the holder the right to sell the underlying crypto at a specified strike price.

If the market price falls below the strike price, the put option gains value, offsetting the loss on the physical crypto holding. This strategy sets a floor price for the asset.

How Can a Protective Put Option Be Used to Hedge against This Maximum Loss?

How Does a Call Option Differ Fundamentally from a Put Option?

What Is a “Bear Put Spread” and How Does It Limit Risk Compared to Buying a Single Put?

What Is the Primary Purpose of the Put Option in a Collar Strategy?