Buying a crypto Put option (Buy Put)
What does buying a Put option do?
Why would I buy a Put option?
How do I calculate my Breakeven Price?
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?
Loss = Premium Payable
Scenario 1: P&L if Settlement Price (BTC settles at $5,000) < Strike Price
= ($10,000 — $200 -$5,000) / $5,000
= 0.96 BTC
Scenario 2: P&L if Settlement Price (BTC settles at $15,000) ≥ Strike Price
Loss = Premium Payable
What is my maximum profit?
Buying a Put option gives you the opportunity to enjoy substantial profit during a bear market. If the underlying asset goes to zero, you profit from the entire Strike Price minus the Premium Payable for the Put option
What is my maximum loss?
Buying a Put option on Sparrow
Why are premiums paid in SP$?
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.
Learn more about
- Selling a Crypto Option Contract
– Selling Crypto Call Option (Sell Call)
– Selling Crypto Put Option (Sell Put)
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