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What are the potential risks and rewards of using cash secured puts in the cryptocurrency market?

avatarBesaDec 14, 2021 · 3 years ago1 answers

What are the potential risks and rewards of using cash secured puts in the cryptocurrency market? How does this strategy work and what should investors consider before using it?

What are the potential risks and rewards of using cash secured puts in the cryptocurrency market?
Cryptocurrency
Cash Secured Puts
Risks

1 answers

  • avatarDec 14, 2021 · 3 years ago
    Using cash secured puts in the cryptocurrency market can be a risky strategy, but it can also offer potential rewards. This strategy involves selling put options and receiving a premium, which can provide immediate income. If the price of the underlying cryptocurrency remains above the strike price, the investor keeps the premium without having to buy the cryptocurrency. However, if the price falls below the strike price, the investor is obligated to buy the cryptocurrency at that price. This can result in losses if the price continues to decline. It's important for investors to carefully assess their risk tolerance and to have a clear understanding of the potential rewards and drawbacks before using cash secured puts in the cryptocurrency market.

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