How can put and call options be used to hedge against price volatility in the world of digital currencies?

1 answers

• Dec 27, 2021 · 3 years ago
  Put and call options are commonly used in the digital currency market to hedge against price volatility. When the price of a digital currency is expected to decrease, investors can use put options to sell the digital currency at a predetermined price, thereby protecting themselves from potential losses. Conversely, when the price of a digital currency is expected to increase, investors can use call options to buy the digital currency at a predetermined price, allowing them to benefit from the price increase. This hedging strategy can help investors mitigate the risks associated with price volatility in the digital currency market.
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