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How can I use strangle options in cryptocurrency trading?

avatarmarsha mDec 26, 2021 · 3 years ago1 answers

Can you explain how to use strangle options in cryptocurrency trading? What are the benefits and risks associated with this strategy?

How can I use strangle options in cryptocurrency trading?

1 answers

  • avatarDec 26, 2021 · 3 years ago
    Strangle options can be a useful tool in cryptocurrency trading. This strategy allows traders to hedge against potential price fluctuations by simultaneously buying a call option and a put option. The call option benefits from price increases, while the put option benefits from price decreases. This strategy is particularly effective in volatile markets where price movements are more frequent. However, it's important to note that strangle options carry risks. If the price remains relatively stable, both options may expire worthless, resulting in a loss. Additionally, the cost of purchasing both options can eat into potential profits. Therefore, it's crucial to carefully consider market conditions and risk tolerance before using this strategy.