How does selling a put option in the money affect the price of cryptocurrencies?

3 answers

• Nov 28, 2021 · 3 years ago
  When a put option is sold in the money, it means that the strike price of the option is higher than the current market price of the underlying cryptocurrency. This indicates that the seller of the put option is obligated to buy the cryptocurrency at a higher price if the option is exercised. The act of selling a put option in the money can have a downward pressure on the price of cryptocurrencies. This is because the seller may need to purchase the cryptocurrency at a higher price than the current market price, which can increase the selling pressure and potentially lead to a decrease in price.
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• Nov 28, 2021 · 3 years ago
  Selling a put option in the money can impact the price of cryptocurrencies in a couple of ways. Firstly, it can signal bearish sentiment in the market. When traders sell put options in the money, it suggests that they believe the price of the underlying cryptocurrency will decline. This can influence other market participants to sell their holdings, leading to a decrease in price. Additionally, the selling pressure created by the obligation to buy the cryptocurrency at a higher price can further contribute to the downward movement of the price.
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• Nov 28, 2021 · 3 years ago
  When a put option is sold in the money, it indicates that the seller is willing to buy the cryptocurrency at a higher price than the current market price. This can create a level of support for the price, as there is a buyer at a higher price. However, it is important to note that the impact on the price will ultimately depend on the overall market sentiment and the volume of put options being sold. It is advisable to consider the broader market conditions and factors influencing the demand and supply of cryptocurrencies before drawing conclusions about the price impact of selling put options in the money.
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