What Is the Difference between a “Call Option” and a “Put Option”?
A Call Option gives the holder the right, but not the obligation, to buy an underlying asset at a specified price (strike price) before a specific date. A Put Option gives the holder the right to sell the underlying asset at the strike price before expiration.
Call options profit if the price rises; Put options profit if the price falls. They are fundamental tools for hedging and speculation in financial derivatives.
Glossar
Speculation
Objective ⎊ Speculation involves taking positions in financial derivatives based on forecasts of future price changes, aiming to generate profits from short-term market volatility.
Strike Price
Reference ⎊ The Strike Price is the predetermined reference level set at the contract's inception against which the underlying crypto asset's spot price is compared at expiration or exercise.
Underlying Asset
Futures Pricing incorporates the cost of carry, which in crypto markets includes funding rates derived from perpetual swap markets and the time value associated with holding the spot asset.
Futures Contracts
Mechanism ⎊ Futures contracts, within cryptocurrency and broader financial derivatives, represent standardized agreements obligating parties to transact an asset at a predetermined price on a specified future date; these instruments facilitate price discovery and risk transfer, extending beyond traditional commodities to encompass digital assets and complex financial indices.
Call Option
Entitlement ⎊ The core of a call option within cryptocurrency derivatives represents a contractual right, but not an obligation, to purchase a specified digital asset at a predetermined price, known as the strike price, on or before a specific expiration date.
Derivatives
Instrument ⎊ Derivatives are financial instruments whose value is intrinsically linked to, or "derived" from, an underlying asset, benchmark, or rate.