How does a collar strategy help protect against market volatility in the crypto market?

1 answers

• AMED SAASOct 05, 2024 · a year ago
  A collar strategy is a popular risk management technique used in the crypto market and other financial markets. It involves buying a protective put option to limit downside risk and selling a covered call option to generate income. The protective put option acts as insurance, allowing you to sell your crypto asset at a predetermined price if its value drops below a certain level. This protects you from significant losses in a volatile market. The covered call option, on the other hand, generates income by selling the right to buy your asset at a predetermined price. This strategy helps offset the cost of the protective put option and can potentially enhance your overall returns. Overall, a collar strategy can help protect against market volatility in the crypto market by providing a level of downside protection and income generation.
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