Buying a crypto Put option (Buy Put)


What does buying a Put option do?

Buying a Put gives you the right to sell the underlying asset at your Strike Price on your Settlement Date

Why would I buy a Put option?

You believe the price of the underlying asset (Settlement Price) on the Settlement Date would be lesser than your Breakeven Price

How do I calculate my Breakeven Price?

Breakeven Price [Put option] = [Strike Price] — [Premium Payable]

E.g. Buying a Put option with Strike = $10,000 will require you a Premium Payable of $200 ( In BTC equivalent = $200/$10,000 = 0.02 BTC), giving you the right to sell 1 BTC for $10,000 at settlement. Your Breakeven Price would be $9,800

How do I calculate my profit?

Profit = [Breakeven Price] — [Settlement Price]

Loss = Premium Payable

Scenario 1: P&L if Settlement Price (BTC settles at $5,000) < Strike Price

Profit = [Breakeven Price = Strike Price + Premium Payable] — Settlement Price

= ($10,000 — $200 -$5,000) / $5,000

= 0.96 BTC

Scenario 2: P&L if Settlement Price (BTC settles at $15,000) ≥ Strike Price

Loss = Premium Payable

= -$200

What is my maximum profit?

Buying a Put option gives you the opportunity to enjoy substantial profit during a bear market. If the underlying asset goes to zero, you profit from the entire Strike Price minus the Premium Payable for the Put option

What is my maximum loss?

Buying a Put option limits your loss to the Premium Payable

Buying a Put option on Sparrow

  1. Go to Options > Simplified
  2. Click/Tap TradePROTECT Buy [it will turn Green if correctly activated]
  3. In the Customization Panel on the right
  4. Enter a Strike Price that is lesser than the Current Price to set a Put option
  5. Enter the Settlement Date and Amount Protected
  6. The Premium Payable will be displayed at the bottom
  7. Click/Tap Confirm to place the order


How do I profit?
  • The lower BTC trades below your Breakeven Price at $8,571.81, the greater your profit
  • However, if BTC trades above $8,571.81, your maximum loss would be 428.19 SP$ (Premium Payable), no matter how high BTC rises






Why are premiums paid in SP$?

SP$, as the settlement token in Sparrow, helps in simplifying and standardising the trade settlement process for greater liquidity despite the customized nature of the contracts. Traders can easily value and make better decisions across Sparrow Option contracts.


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