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What is the exercise price in cryptocurrency options?

avatarArthur WeitzDec 25, 2021 · 3 years ago1 answers

Can you explain what the exercise price means in the context of cryptocurrency options? How does it work and why is it important?

What is the exercise price in cryptocurrency options?

1 answers

  • avatarDec 25, 2021 · 3 years ago
    The exercise price in cryptocurrency options refers to the price at which the option holder can buy or sell the underlying cryptocurrency. It is a predetermined price that is set when the option contract is created. The exercise price plays a significant role in determining the profitability of the option. If the market price of the cryptocurrency is higher than the exercise price, the option is in-the-money and the holder can exercise the option to buy or sell the cryptocurrency at a profit. Conversely, if the market price is lower than the exercise price, the option is out-of-the-money and it is generally not exercised. The exercise price is an important consideration for traders as it affects the potential profit or loss of the option trade.