What Is a Protective Put and How Is It Used in Crypto Portfolios?

A protective put is a hedging strategy used to protect against a potential decline in the price of a cryptocurrency that an investor already owns. It involves buying a put option on that specific crypto.

If the price of the crypto falls below the put's strike price, the losses in the crypto holding are offset by the gains from the put option. This strategy effectively sets a minimum selling price for the asset, acting as an insurance policy against a market downturn while still allowing the investor to profit if the price goes up.