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What are the potential drawbacks of implementing zero cost collar fx options in the digital currency industry?

avatarcode-rutoNov 24, 2021 · 3 years ago1 answers

What are some potential disadvantages or negative effects that could arise from the implementation of zero cost collar fx options in the digital currency industry?

What are the potential drawbacks of implementing zero cost collar fx options in the digital currency industry?
Digital Currency
Fx Options
Zero Cost Collar

1 answers

  • avatarNov 24, 2021 · 3 years ago
    From BYDFi's perspective, one potential drawback of implementing zero cost collar fx options in the digital currency industry is the potential impact on liquidity. The sale of call options to offset the cost of put options can limit the availability of call options in the market, potentially reducing liquidity and making it more difficult for traders to enter or exit positions. However, this drawback can be mitigated by careful management of options positions and ensuring that there is sufficient liquidity in the market to support trading activities.

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