How Can a Put Option Be Used to Hedge an Altcoin Investment?

A put option grants the holder the right, but not the obligation, to sell an asset at a specified price (the strike price) before a certain date. By buying a put option on an altcoin they own, an investor sets a floor price for their investment.

If the altcoin's price crashes due to a security breach or market downturn, the put option's value increases, offsetting the loss in the underlying asset, thereby limiting the maximum potential loss.