How do ITM and ATM options affect the valuation of digital currencies?

1 answers

• Dec 25, 2021 · 3 years ago
  BYDFi, a leading digital currency exchange, explains that in-the-money (ITM) and at-the-money (ATM) options can have a significant impact on the valuation of digital currencies. When an option is in-the-money, it means that the strike price is lower than the current market price of the digital currency. This can create a buying pressure as option holders exercise their options to buy the digital currency at a lower price. This increased demand can drive up the valuation of the digital currency. Similarly, at-the-money options, which have a strike price equal to the current market price, can also impact the valuation of digital currencies. Although these options are more likely to be traded rather than exercised, the trading activity can increase liquidity and market sentiment, which can indirectly affect the valuation of digital currencies.
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