Which option strategies in the digital currency space provide a complete hedge to a long stock position?

3 answers

• Nov 28, 2021 · 3 years ago
  One option strategy that can provide a complete hedge to a long stock position in the digital currency space is purchasing put options. Put options give the holder the right, but not the obligation, to sell a specific amount of digital currency at a predetermined price within a certain timeframe. By purchasing put options on the same amount of digital currency as the long stock position, any potential losses in the digital currency market can be offset by the gains from exercising the put options. This strategy allows for downside protection while still maintaining the potential for upside gains in the long stock position.
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• Nov 28, 2021 · 3 years ago
  Another option strategy that can provide a complete hedge to a long stock position in the digital currency space is using a collar strategy. A collar strategy involves purchasing a put option to protect against potential losses in the digital currency market, while simultaneously selling a call option to generate income. This combination of options creates a range, or collar, within which the digital currency position is protected. This strategy allows for limited downside risk while still participating in any potential upside gains in the long stock position.
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• Nov 28, 2021 · 3 years ago
  In the digital currency space, one option strategy that can provide a complete hedge to a long stock position is the use of a protective put. A protective put involves purchasing a put option on the same amount of digital currency as the long stock position. This put option acts as insurance against any potential losses in the digital currency market. If the digital currency price falls, the put option can be exercised, allowing the investor to sell the digital currency at a predetermined price. This strategy provides downside protection while still allowing for potential gains in the long stock position.
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