How do strike price and exercise price affect the profitability of cryptocurrency options?

1 answers

• Malani24Nov 09, 2021 · 4 years ago
  In the world of cryptocurrency options, the strike price and exercise price are critical factors that determine the profitability of trades. Let's say you have a call option for a specific cryptocurrency with a strike price of $10,000 and the current market price is $12,000. If you exercise the option, you can buy the cryptocurrency at $10,000 and immediately sell it at the market price of $12,000, resulting in a $2,000 profit. However, if the strike price is higher than the market price, it wouldn't make sense to exercise the option as you would be buying the cryptocurrency at a higher price than what it's worth. Similarly, for put options, if the strike price is lower than the market price, exercising the option would lead to a profit. The strike price and exercise price directly impact the potential profitability of cryptocurrency options and should be carefully considered before making any trading decisions.
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