What strategies should I consider when trading options on digital currencies?

1 answers

• Dec 18, 2021 · 3 years ago
  At BYDFi, we believe that when trading options on digital currencies, it's important to consider the time decay factor. Options have an expiration date, and as the expiration date approaches, the time value of the option decreases. This means that if you're buying options, you need to be mindful of the time decay and choose options with a longer expiration date if you expect the price of the underlying digital currency to move in your favor. On the other hand, if you're selling options, you can take advantage of time decay by choosing options with a shorter expiration date. This allows you to collect premium and potentially profit from the time decay. Additionally, it's important to consider the liquidity of the options market. Digital currencies with higher trading volumes tend to have more liquid options markets, which can result in tighter bid-ask spreads and better execution prices. Overall, considering time decay and liquidity can help improve your options trading strategy on digital currencies.
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