What Is a “Call Option” and a “Put Option,” and How Are They Used in Cryptocurrency Hedging Strategies?

A call option grants the holder the right to buy an asset at a set price (strike price) before or on expiration. A put option grants the holder the right to sell an asset at a set price.

In hedging, a crypto holder might buy a put option to lock in a minimum sale price for their asset, protecting against a price drop (downside risk), while still retaining the benefit of any price increase.