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Interesting. Thanks for the example. Looks like Put option limits the risk so if bitcoin becomes 15K then I have to shell out 5K from my pocket.
by perseusprime11 9y ago
Interesting. Thanks for the example. Looks like Put option limits the risk so if bitcoin becomes 15K then I have to shell out 5K from my pocket.
- workthrowaway27 9y agoActually, if bitcoin becomes 15k then you don't have to pay anything. The put option gives you the "option" to sell a bitcoin for 10k (in this example), but you're not required to do so. In practice you only sell it if you'll make a profit. So in the case where bitcoin is 15k after 5 years your put option is worthless and you've just lost whatever the put option cost when you bought it.
- perseusprime11 9y agoIs there any good literature that makes it easy to learn this aspect? How much does a put option cost typically?