2021-07-23 16:59:01
What is a PUT option?
There are 5 fundamental parameters to an option:
- Option type: it can be a CALL option or a PUT option.
- Expiry date: a pre established date marks the time when the option expires and is exercised.
- Option premium: the cost the buyer pays to the seller for the right to trade until the expiry date, at the strike price.
- Strike price: a fixed price, stated in the option contract, at which the option buyer has the right to buy
(sell).
- Underlying asset: in our market, the cryptocurrency or coins.
For example $BTC or $DLTA
A PUT option is defined as a
contract between two parties to exchange an asset at a strike price. This contract has an expiration date.
One party, the buyer of the PUT has the right, but not an obligation, to sell the asset at the strike price. This right must be exercised until a specific date, previously settled. Meanwhile, the opposite party has the obligation to buy the asset at the strike price if the buyer exercises his right.
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