# How Can an Investor Use Put Options to Hedge against a Lock-up Expiration? ▴ Learn

**Published:** 2025-11-17
**Categories:** Learn

---

## How Can an Investor Use Put Options to Hedge against a Lock-up Expiration?

An investor who holds tokens subject to a lock-up, or fears a market crash post-expiration, can buy put options on the asset. If the price drops following the unlock, the put options gain value, offsetting the loss on the underlying tokens.

This strategy provides insurance against the potential selling pressure.

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

How Do Lock-up Periods Affect the Classification of a Pre-Functional Token?

How Can a Financial Derivative Be Used to Hedge against a DAO’s Treasury Risk?

How Do Options Contracts Offer a Potential Hedge against Impermanent Loss?

## Discover More

- 
### [What Is the Role of Token Lock-up Periods in Preventing Rapid Governance Attacks in Crypto Projects?](https://crypto.greeks.live/learn/what-is-the-role-of-token-lock-up-periods-in-preventing-rapid-governance-attacks-in-crypto-projects/)
![The highly polished, cream-colored ovate structure atop a darker base suggests a sealed ledger node or a conceptual representation of a decentralized autonomous organization interface. A subtle cyan ring accents the aperture, symbolizing secured smart contract execution or validated oracle feeds. This visual encapsulates the intrinsic volatility inherent in asset collateralization underlying leveraged perpetual swaps. The reflection mirrors the structure, illustrating dual entry points perhaps for buy-side versus sell-side arbitrage mechanisms within DeFi lending protocols. It embodies the quest for yield farming stability amidst fluctuating AMM liquidity pools and managing Gamma exposure in options markets. The design evokes regulatory compliance packaging around exotic crypto derivatives like exotic options or structured products.](https://crypto.greeks.live/wp-content/uploads/2025/10/Sleek-Ovoid-Blockchain-Governance-Module-Reflection-Demonstrating-Impermanent-Loss-Mitigation-Strategies.jpg)

Vesting schedules mandate long-term commitment, blocking sudden accumulation for hostile governance votes.

- 
### [How Can a Smart Contract Handle the Exercise of an American-Style Option, Which Can Be Exercised Any Time before Expiration?](https://crypto.greeks.live/learn/how-can-a-smart-contract-handle-the-exercise-of-an-american-style-option-which-can-be-exercised-any-time-before-expiration/)
![This visual metaphor depicts a sharp, upward-sweeping stabilizer, speckled with simulated cosmic particulates, emerging from a curved, layered structure against a void background, reminiscent of a turquoise planetary body. This design evokes the high-leverage mechanics inherent in perpetual futures contracts a prime example of derivative innovation on Layer 1 protocols. The speckling suggests transaction noise or volatility clustering impacting delta hedging strategies for synthetic asset issuance. The pronounced vertical element signifies aspiration toward parabolic price discovery often sought in high-risk DeFi yield farming or liquidity provision mechanisms, contrasting sharply with the stable underlying asset base represented by the smooth curves, perhaps symbolizing invariant functions in automated market makers or robust smart contract execution against market microstructure friction.](https://crypto.greeks.live/wp-content/uploads/2025/10/Retro-Futuristic-Rocket-Fin-Analogous-to-Decentralized-Finance-Governance-Structure-Vector-Configuration.jpg)

An American option smart contract has an "exercise" function the holder can trigger anytime before expiry.

- 
### [Define the Terms ‘Strike Price’ and ‘Expiration Date’ in the Context of a Tokenized Options Contract](https://crypto.greeks.live/learn/define-the-terms-strike-price-and-expiration-date-in-the-context-of-a-tokenized-options-contract/)
![This visual dissection reveals nested strata within a smooth, teal ovoid structure, suggesting an internal mechanism analogous to derivative contract decomposition. The separation exposes metallic concentric layers and clear fluid dynamics, mirroring the intrinsic value components of options. It represents the systemic opacity and subsequent required transparency in Black Scholes modeling adaptations for volatile digital asset volatility surface reconstruction. High-frequency trading protocols demand such deep inspection into synthetic asset construction. This visualization embodies the structural complexity underpinning secure decentralized autonomous organization governance frameworks and nested asset collateralization schemes. The internal architecture evokes ledger block finality pathways.](https://crypto.greeks.live/wp-content/uploads/2025/10/Decentralized-Finance-Cryptographic-Asset-Structure-Unveiling-Mechanism-Explaining-Complex-Option-Payoff-Profiles.jpg)

Strike price is the set execution price; expiration date is the final day to exercise the tokenized option right.

- 
### [What Is the Role of a “Lock-up Period” for Pre-Sale Tokens in Managing Initial Volatility?](https://crypto.greeks.live/learn/what-is-the-role-of-a-lock-up-period-for-pre-sale-tokens-in-managing-initial-volatility/)
![A stark black background isolates intersecting planes of metal and composite materials exhibiting a striking teal, deep blue, and off-white palette, suggestive of precision engineering. This composition models the multi-vector dynamics inherent in DeFi protocol arbitration and governance staking mechanisms. The sharp leading edge and complex dihedral arrangement reflect the calibration required for optimal slippage minimization during rapid liquidity pool rebalancing or complex derivative contract settlement. The texture, marred by minute dark speckling, symbolizes the inherent on-chain transaction friction and gas optimization strategies crucial for sustained Decentralized Finance operations and Automated Market Maker impermanent loss mitigation. This structure embodies the tension between centralized execution layers and distributed consensus validation essential for secure digital asset custody.](https://crypto.greeks.live/wp-content/uploads/2025/10/Aerodynamic-Control-Surface-Configuration-Representing-Decentralized-Autonomous-Organization-Governance-Structures.jpg)

Prevents a sudden "dump" of large pre-sale token allocations, ensuring a more stable and orderly secondary market.

- 
### [What Is a Common Lock-up Period for a Project’s Core Team Tokens?](https://crypto.greeks.live/learn/what-is-a-common-lock-up-period-for-a-projects-core-team-tokens/)
![This highly detailed macro visualization captures a composite mechanical joint exhibiting complex structural articulation suggesting controlled leverage or option contract unwinding. The pale beige and deep cyan components interface via dark metallic bushings illuminated by internal electric blue luminescence hinting at secure settlement protocols or secure ledger commitment. Spherical nodes interact with finely machined linkages mimicking the precise execution flow for exotic derivatives pricing models like Bermudan swaptions or contingent claim settlements within decentralized finance infrastructure. The visual metaphor underscores the exactitude required in managing collateralized debt positions or navigating complex smart contract logic across volatile digital asset landscapes. This structure represents robust execution fidelity underpinning over-the-counter swaps.](https://crypto.greeks.live/wp-content/uploads/2025/10/Modular-Articulation-Point-Visualizing-Cryptocurrency-Derivatives-Execution-Mechanism-Precision.jpg)

Typically 1-2 years lock-up, followed by a 1-3 year gradual vesting schedule to ensure long-term commitment.

- 
### [How Does the Use of Hashing in Derivatives Settlement Compare to Its Use in Securing Cryptocurrency Transactions?](https://crypto.greeks.live/learn/how-does-the-use-of-hashing-in-derivatives-settlement-compare-to-its-use-in-securing-cryptocurrency-transactions/)
![This composition captures the intersection of legacy data persistence mechanisms, symbolized by the aged reel and cream-hued casing, juxtaposed with a sharp planar element potentially representing a ledger or smart contract interface. The visible texture and slight degradation suggest an exploration of archival fidelity within volatile asset management like decentralized finance primitives. The greenish patina on the metallic disc evokes concepts of enduring ledger state against ephemeral market velocity inherent in high-frequency options execution or perpetual futures settlements. This setup metaphorically models the technical debt versus innovation velocity encountered when integrating traditional financial modeling with blockchain security protocols or understanding arbitrage opportunities across divergent spot and derivatives markets, perhaps visualizing the risk parameters during a liquidity crunch event or a complex collateralized debt position unwinding. The focus highlights structural rigidity versus material flux essential for robust derivative valuation models.](https://crypto.greeks.live/wp-content/uploads/2025/10/Retro-Futurist-Data-Spool-Interfacing-with-Analytical-Hedging-Instruments-and-Legacy-System-Grills.jpg)

Both use hashing for data integrity, but in cryptocurrencies it's foundational to the entire system, while in derivatives it's a tool for verification in a centralized framework.

- 
### [How Can Commit-Reveal Be Adapted for Use in a Decentralized Options Auction?](https://crypto.greeks.live/learn/how-can-commit-reveal-be-adapted-for-use-in-a-decentralized-options-auction/)
![A highly polished metallic surface, resembling a data platter or perhaps a centralized exchange ledger, strongly reflects a translucent cyan sphere etched with a distinct Yin-Yang symbol. This assembly is juxtaposed against dark, intricate electromechanical components suggesting precision infrastructure like a high-frequency trading engine or hardware security module. The cyan orb symbolizes an intrinsic asset volatility metric perhaps analogous to implied volatility in options trading or stochastic resonance within decentralized finance protocols. The mirrored surface implies instantaneous settlement potential, contrasting with the eternal duality represented by the symbol, referencing the ongoing balancing act of on-chain governance versus off-chain execution mechanisms. This setup conceptually frames complex risk management strategies concerning exotic cryptocurrency derivatives and systemic market friction. The structure conveys the fragility inherent in maintaining arbitrage opportunities across disparate liquidity pools under extreme market microstructure stress.](https://crypto.greeks.live/wp-content/uploads/2025/10/Quantum-Ledger-Imbalance-Visualized-Through-Reflective-Medium-and-Spherical-Volatility-Index.jpg)

It prevents bid front-running in an auction by requiring all bidders to commit their secret bid details before the reveal and execution phase.

- 
### [What Is the Difference between a Burn and a Lock-Up?](https://crypto.greeks.live/learn/what-is-the-difference-between-a-burn-and-a-lock-up/)
![Symmetrical holographic rendering depicts dual complex mechanisms intersecting a central nexus signifying bifurcated liquidity pools or counterparty risk assessment. The cyan neon ring encapsulates the primary action, suggesting a threshold or critical margin level analogous to option expiry boundaries. This abstract visual represents the systemic architecture underlying decentralized finance derivatives, perhaps illustrating automated market maker functions or sophisticated algorithmic strategies for volatility arbitrage. Specific features suggest precision engineering critical for accurate futures contract settlement and complex payoff structures inherent in synthetic asset creation across DeFi protocols where settlement finality demands robust infrastructure analogous to these interlocking elements. The dark, high-contrast environment emphasizes the precision required for managing on chain risk management exposure.](https://crypto.greeks.live/wp-content/uploads/2025/10/Decentralized-Autonomous-Organization-Governance-Token-Strike-Price-Mechanism-Visualization-High-Frequency-Hedging.jpg)

Burn is permanent destruction (supply reduction); lock-up is temporary restriction (tokens remain in total supply).

- 
### [How Can a Protective Put Option Be Used to Hedge against This Maximum Loss?](https://crypto.greeks.live/learn/how-can-a-protective-put-option-be-used-to-hedge-against-this-maximum-loss/)
![The highly polished silver casing and deep cobalt semi-spherical viewport evoke robust cold storage security protocols for digital assets. This structure symbolizes the encapsulated governance mechanism of a Decentralized Autonomous Organization DAO. The smooth, reflective surface mirrors market volatility and the insulated nature of institutional crypto custody solutions safeguarding non-custodial private keys. The metallic ring suggests an auditable smart contract boundary, essential for automated execution of contingent options contracts and managing collateralized debt positions CDPs underpinning DeFi primitives. This visual metaphor emphasizes secure ledger integrity against flash loan exploits.](https://crypto.greeks.live/wp-content/uploads/2025/10/Streamlined-Cryptographic-Asset-Custody-Encapsulation-Representing-Decentralized-Autonomous-Organization-Governance-Module.jpg)

Buying a put option establishes a floor for the asset's price, creating a "collar" strategy to hedge against a price drop.

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