What Is the Difference between a Call Option and a Put Option in Crypto?
A call option gives the holder the right to buy the underlying cryptocurrency at the strike price. Buyers of calls expect the crypto price to rise, while sellers expect it to fall or stay flat.
A put option gives the holder the right to sell the underlying cryptocurrency at the strike price. Buyers of puts expect the crypto price to fall, and sellers expect it to rise or stay flat.
Both are used for speculation or hedging.
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.
Call Option
Upside ⎊ Acquiring a Call Option provides leveraged upside participation in the appreciation of a specific cryptocurrency asset.
Crypto Price
Momentum ⎊ The crypto price, within derivative contexts, reflects a dynamic equilibrium influenced by order flow, inventory risk, and the prevailing sentiment across spot and futures markets.
Maximum Loss
Value ⎊ Maximum Loss represents the absolute worst-case financial outcome, expressed as a specific monetary value, that a derivatives position can incur over its entire life cycle.
Put Option
Insurance ⎊ Purchasing a Put Option functions as a form of portfolio insurance, establishing a guaranteed minimum selling price for the underlying crypto asset.