What is a strangle in the context of cryptocurrency trading?

1 answers

• Dec 19, 2021 · 3 years ago
  In the context of cryptocurrency trading, a strangle is a strategy that involves buying both a call option and a put option on a specific cryptocurrency. The call option gives the holder the right to buy the cryptocurrency at a predetermined price, while the put option gives the holder the right to sell the cryptocurrency at a predetermined price. By purchasing both options, traders can profit from significant price movements in either direction. If the price of the cryptocurrency increases, the call option will be profitable, and if the price decreases, the put option will be profitable. The advantage of using a strangle strategy is that it allows traders to potentially profit from volatility without having to accurately predict the direction of the price movement. However, it's important to note that a strangle can result in a loss if the price remains relatively stable.
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