Davide
@0xdavide
🐻After the first two protection strategies (delta neutral and short), today we see two related options: -Sell Call Position (Covered Call). -Buy Put Position (Protective Put). Call options give the buyer the right to buy an asset at a predetermined price by a certain date. Put options, on the other hand, give the right to sell that asset. Strike price is the agreed price to buy or sell the underlying asset. The premium is the cost paid by the option buyer to the seller to obtain this right. "Call in profit", if I sell the option at the strike price I earn from the premium but if the price rises above the strike price I get missed profits. "Put in profit", if I sell the option at the strike price I earn from the premium but if the price falls below the strike price I get missed profits.
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Davide
@0xdavide
Call allows you to earn on the rise (if the price drops you do not get losses, apart from the premium paid). ✓Coverage is a sale of a CALL option: profit on laterality (premium) but strong reduction of the profit in case of uptrend of the asset (closing the position at the strike price). -You get the premium right away, which offers a small extra profit even if BTC stays still. -If the price of BTC goes above the strike price, you will be forced to sell at that price (giving up further gains). -If the price does not go above the strike, you keep BTC and the premium. Protective "Put" on spot position allows you to profit on the downside. ✓Buying PUT option covers a BTC spot position in a downtrend (with partial reduction of profit in case of strong uptrend), loss on laterality (I lose the cost of the premium). -If BTC goes down, the put increases in value and limits the loss. -If BTC goes up, you only lose the premium paid for the put, but the gain on the long position compensates.
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