Why do cryptocurrency traders often prefer options with lower strike prices?

3 answers

• Mar 22, 2022 · 3 years ago
  One reason why cryptocurrency traders often prefer options with lower strike prices is because they offer a higher potential for profit. When the strike price is lower, it means that the option is closer to being in-the-money. This means that if the price of the underlying cryptocurrency increases, the option has a higher chance of being profitable. Traders who believe that the price of the cryptocurrency will rise significantly may choose options with lower strike prices to maximize their potential gains.
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• Mar 22, 2022 · 3 years ago
  Another reason is that options with lower strike prices are generally cheaper to purchase. This allows traders to control a larger amount of cryptocurrency with a smaller investment. By using options with lower strike prices, traders can potentially amplify their returns if the price of the cryptocurrency moves in their favor. This can be especially beneficial for traders with limited capital who want to participate in the cryptocurrency market.
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• Mar 22, 2022 · 3 years ago
  From BYDFi's perspective, options with lower strike prices are preferred by cryptocurrency traders because they offer a greater degree of leverage. Leverage allows traders to control a larger position with a smaller amount of capital. This can amplify both potential gains and losses. Traders who are confident in their analysis and want to take advantage of short-term price movements may choose options with lower strike prices to maximize their leverage and potential profits.
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