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What is the meaning of strike in options trading for cryptocurrencies?

avatarMickey VoloDec 17, 2021 · 3 years ago3 answers

Can you explain the concept of strike in options trading for cryptocurrencies in detail? How does it work and what role does it play in the trading process?

What is the meaning of strike in options trading for cryptocurrencies?

3 answers

  • avatarDec 17, 2021 · 3 years ago
    In options trading for cryptocurrencies, the strike refers to the predetermined price at which the option can be exercised. It represents the price level at which the option holder has the right to buy or sell the underlying cryptocurrency. The strike price is set at the time of the option contract creation and remains fixed throughout the contract's duration. When the market price of the underlying cryptocurrency reaches or surpasses the strike price, the option becomes profitable and can be exercised. If the market price does not reach the strike price, the option expires worthless.
  • avatarDec 17, 2021 · 3 years ago
    Strike in options trading for cryptocurrencies is like a target price. It's the price at which you hope the market will reach or surpass so that your option becomes valuable. If you have a call option with a strike price of $10, and the market price of the underlying cryptocurrency goes above $10, you can exercise the option and buy the cryptocurrency at the strike price, even if the market price is higher. On the other hand, if you have a put option with a strike price of $10, and the market price goes below $10, you can exercise the option and sell the cryptocurrency at the strike price, even if the market price is lower.
  • avatarDec 17, 2021 · 3 years ago
    When it comes to strike in options trading for cryptocurrencies, BYDFi offers a wide range of options contracts with different strike prices. These contracts allow traders to speculate on the price movement of various cryptocurrencies without actually owning them. The strike price is an essential component of these contracts as it determines the potential profitability and risk associated with the options. Traders can choose strike prices based on their market expectations and risk appetite. It's important to note that options trading involves risks, and it's advisable to thoroughly understand the concept of strike and other related factors before engaging in such trading activities.