What are the potential risks associated with holding in-the-money options on cryptocurrencies until expiration?

3 answers

• Dec 17, 2021 · 3 years ago
  One potential risk of holding in-the-money options on cryptocurrencies until expiration is the possibility of a significant price drop in the underlying cryptocurrency. If the price of the cryptocurrency decreases below the strike price of the option, the option may become worthless, resulting in a loss for the investor. It is important for investors to closely monitor the price movements of the underlying cryptocurrency to mitigate this risk.
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• Dec 17, 2021 · 3 years ago
  Another risk is the potential for liquidity issues. If the market for the underlying cryptocurrency becomes illiquid, it may be difficult for the investor to sell the option at a favorable price. This can limit the investor's ability to exit the position and potentially result in losses.
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• Dec 17, 2021 · 3 years ago
  From BYDFi's perspective, holding in-the-money options on cryptocurrencies until expiration can be a risky strategy. While it may offer the potential for higher returns, it also exposes investors to the possibility of significant losses if the market conditions change unfavorably. It is important for investors to carefully consider their risk tolerance and investment goals before engaging in this strategy.
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