# How Can Options Be Used for Hedging a Cryptocurrency Portfolio? ⎊ Path

**Published:** 2025-12-04
**Author:** Greeks.live
**Categories:** Path

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## How Can Options Be Used for Hedging a Cryptocurrency Portfolio?

Options can be used to hedge against downside risk by buying protective put options on a cryptocurrency or a crypto-related ETF. If the price of the underlying asset falls, the gain from the put option offsets the portfolio loss.

This strategy limits potential losses while allowing the portfolio to benefit from price appreciation.

- [What Is a “Protective Put” Strategy?](https://learn.greeks.live/path/what-is-a-protective-put-strategy/)

- [What Is a Protective Put Strategy in Options Trading?](https://learn.greeks.live/path/what-is-a-protective-put-strategy-in-options-trading/)

- [What Is a “Bear Put Spread” and How Does It Limit Risk Compared to Buying a Single Put?](https://learn.greeks.live/path/what-is-a-bear-put-spread-and-how-does-it-limit-risk-compared-to-buying-a-single-put/)

- [How Can a Portfolio Manager Use Derivatives to Hedge against the Risk of Token Governance Changes?](https://learn.greeks.live/path/how-can-a-portfolio-manager-use-derivatives-to-hedge-against-the-risk-of-token-governance-changes/)

- [How Can Options Be Used to Hedge a Long Position in a Cryptocurrency?](https://learn.greeks.live/path/how-can-options-be-used-to-hedge-a-long-position-in-a-cryptocurrency/)

- [Provide a Simple Example of a Protective Put Strategy for Bitcoin](https://learn.greeks.live/path/provide-a-simple-example-of-a-protective-put-strategy-for-bitcoin/)

- [Can a Validator Use a Futures Contract to Hedge the Price Risk of Their Staked Assets?](https://learn.greeks.live/path/can-a-validator-use-a-futures-contract-to-hedge-the-price-risk-of-their-staked-assets/)

- [What Is the Term for Holding an Asset and Buying a Put Option?](https://learn.greeks.live/path/what-is-the-term-for-holding-an-asset-and-buying-a-put-option/)

## Glossar

### [Protective Put Options](https://learn.greeks.live/area/protective-put-options/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Framework ⎊ Protective put options, within the cryptocurrency derivatives landscape, represent a strategic hedging mechanism designed to mitigate downside risk while retaining potential upside exposure.

## Discover More

### [What Is 'Delta Hedging' and How Can It Be Applied to a Liquidity Provider's Position to Dynamically Manage Risk?](https://learn.greeks.live/path/what-is-delta-hedging-and-how-can-it-be-applied-to-a-liquidity-providers-position-to-dynamically-manage-risk/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is 'Delta Hedging' and How Can It Be Applied to a Liquidity Provider's Position to Dynamically Manage Risk?](https://learn.greeks.live/wp-content/uploads/2025/10/Xenomorphic-Delta-Wing-Flight-Dynamics-Visualized-Through-Dark-Mode-Digital-Asset-Portfolio-Convergence-Schematics.webp)

Delta hedging uses derivatives to neutralize an LP position's sensitivity to price changes, requiring constant, costly adjustments.

### [Beyond Voting, What Are the Different Types of Financial Derivatives Used to Manage Cryptocurrency Price Volatility?](https://learn.greeks.live/path/beyond-voting-what-are-the-different-types-of-financial-derivatives-used-to-manage-cryptocurrency-price-volatility/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Beyond Voting, What Are the Different Types of Financial Derivatives Used to Manage Cryptocurrency Price Volatility?](https://learn.greeks.live/wp-content/uploads/2025/10/Abstract-Visualization-of-Digital-Asset-Volatility-and-Derivative-Pricing-Mechanics-in-Near-Field-Focus.webp)

Futures, perpetual swaps, and options are the main derivatives used for leverage, speculation, and hedging crypto volatility.

### [How Are Naked Options Typically Used in Cryptocurrency Options Trading?](https://learn.greeks.live/path/how-are-naked-options-typically-used-in-cryptocurrency-options-trading/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Are Naked Options Typically Used in Cryptocurrency Options Trading?](https://learn.greeks.live/wp-content/uploads/2025/10/Minimalist-Lens-Refraction-Visualizing-Volatility-Surface-in-Decentralized-Finance-Instruments.webp)

Used by experienced crypto traders to profit from premium when anticipating price stagnation or a move against the option's direction.

### [Are Dark Pools Used in Cryptocurrency Markets to Prevent Information Leakage?](https://learn.greeks.live/path/are-dark-pools-used-in-cryptocurrency-markets-to-prevent-information-leakage/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Are Dark Pools Used in Cryptocurrency Markets to Prevent Information Leakage?](https://learn.greeks.live/wp-content/uploads/2025/10/Advanced-Volatility-Surface-Calibration-Mechanism-Involving-Bifurcating-Asymmetric-Hedging-Instruments.webp)

Dark pools, or OTC desks, are used in crypto to execute large trades privately, minimizing market impact and information leakage.

### [What Is "Delta Hedging" and How Is It Used with Options?](https://learn.greeks.live/path/what-is-delta-hedging-and-how-is-it-used-with-options/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is "Delta Hedging" and How Is It Used with Options?](https://learn.greeks.live/wp-content/uploads/2025/10/Crystalized-Geometric-Fin-Structure-Piercing-Digital-Asset-Datum-Through-Black-Void.webp)

Delta hedging uses the underlying asset's delta to neutralize directional price risk, creating a "delta-neutral" portfolio.

### [Can an RFQ Platform Integrate with a CLOB for Hedging Purposes?](https://learn.greeks.live/path/can-an-rfq-platform-integrate-with-a-clob-for-hedging-purposes/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Can an RFQ Platform Integrate with a CLOB for Hedging Purposes?](https://learn.greeks.live/wp-content/uploads/2025/10/Transparent-Acrylic-Arms-Intersecting-atop-a-Reflective-Digital-Asset-Platter-Denoting-Volatility-Surface.webp)

Yes, LPs integrate RFQ systems with CLOBs to automatically execute immediate Delta or directional hedges.

### [What Is Delta Hedging and Why Is It Important for a DAO Acting as a Market Maker for Options?](https://learn.greeks.live/path/what-is-delta-hedging-and-why-is-it-important-for-a-dao-acting-as-a-market-maker-for-options/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is Delta Hedging and Why Is It Important for a DAO Acting as a Market Maker for Options?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Machining-of-Decentralized-Exchange-Automated-Market-Maker-Mechanism-Interface-Geometry.webp)

Dynamically buying/selling the underlying asset to keep the options portfolio's price sensitivity (Delta) near zero, neutralizing directional risk.

### [What Is the Primary Risk Associated with a DAO Treasury Holding a Highly Concentrated Native Token Portfolio?](https://learn.greeks.live/path/what-is-the-primary-risk-associated-with-a-dao-treasury-holding-a-highly-concentrated-native-token-portfolio/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Primary Risk Associated with a DAO Treasury Holding a Highly Concentrated Native Token Portfolio?](https://learn.greeks.live/wp-content/uploads/2025/10/Exploded-View-of-Cross-Coupled-Mechanical-Actuators-Simulating-Complex-Derivative-Contract-Settlement-Mechanisms.webp)

Extreme market volatility and high price fluctuation risk, coupled with potential market destabilization from large token sales.

### [How Is Vega Used to Manage Volatility Exposure in an Options Portfolio?](https://learn.greeks.live/path/how-is-vega-used-to-manage-volatility-exposure-in-an-options-portfolio/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Is Vega Used to Manage Volatility Exposure in an Options Portfolio?](https://learn.greeks.live/wp-content/uploads/2025/10/Analyzing-Digital-Asset-Volatility-Through-Stochastic-Process-Modeling-of-Option-Greeks-Visualization.webp)

Vega measures the option price sensitivity to implied volatility and is used to create a Vega-neutral portfolio to hedge volatility risk.

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