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Yes puts or calls can get you liquidated by swings. I was trying to get across that a lot of people are using high leverage right now to get-rich-quick and, es
by errantmind 5y ago
Yes puts or calls can get you liquidated by swings.
I was trying to get across that a lot of people are using high leverage right now to get-rich-quick and, especially in the crypto space, it is risky to the point of being unwise.. unless you have an edge with backtested, medium-term models that adequately account for the wide range of volatility, with automated take-profit / stop-loss in place.
- anthony_barker 5y agoIf you purchase the put you can only loose the premium. Naked puts (writing them) are another story
- tasuki 5y ago> Yes puts or calls can get you liquidated by swings. No, when buying puts/calls, you can't get liquidated by swings. The worst that can happen is that they expire worthless. They could get liquidated if you borrowed money to trade them, but that's not in the nature of the put/call, that's in the nature of borrowing money to trade. In this specific instance, I understand the author bought puts with actual money, and there's no way he could get liquidated by whatever swing.
- errantmind 5y agoIndeed, I should have qualified that statement with "on margin"
- tasuki 5y agoYes, if you buy anything "on margin", swings can get you liquidated. It's the margin that causes the potential forced liquidation, not the puts/calls.