What is the intrinsic value of a put option in the context of cryptocurrency trading?

Can you explain the concept of intrinsic value in relation to put options in cryptocurrency trading? How does it affect the pricing and profitability of these options?

1 answers
- In the context of cryptocurrency trading, the intrinsic value of a put option is the potential profit that can be obtained by selling the underlying cryptocurrency at a higher price than the strike price of the option. This value is calculated by subtracting the current market price of the cryptocurrency from the strike price. The intrinsic value of a put option is important for traders as it determines whether the option is in-the-money or out-of-the-money. If the intrinsic value is positive, the option is in-the-money and can be exercised for a profit. If the intrinsic value is zero or negative, the option is out-of-the-money and exercising it would result in a loss. Traders use the intrinsic value of put options to make informed decisions about buying, selling, or exercising these options in the cryptocurrency market.
Mar 16, 2022 · 3 years ago
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