Put Option
A put option gives the holder the right (not obligation) to sell an asset at a specific price (strike) before a specific date (expiration). You profit if the asset falls below the strike price.
Understanding the Concept
Puts are bearish bets or portfolio insurance. If you think a stock will crash, puts let you profit from the decline with limited risk—you can only lose the premium. Puts also hedge existing positions—owning $10,000 in stock plus protective puts means your downside is capped. During market crashes, put values explode (that's when you want them). Sophisticated traders sell puts to collect premium on stocks they'd want to own anyway. Crypto puts are available on Deribit for BTC/ETH. Understanding puts completes your options toolkit.
Real-World Example
You're nervous about holding Bitcoin at $50,000. You buy a $45,000 put for $1,000. If BTC crashes to $35,000, your put is worth $10,000+. The $1,000 insurance paid off. If BTC keeps rallying, you only lose the $1,000 premium.
How Strykr Helps
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