What are the differences between option strike price and exercise price in the world of cryptocurrencies?
Gracious MabhekaDec 25, 2021 · 3 years ago3 answers
Can you explain the distinctions between option strike price and exercise price in the realm of cryptocurrencies? How do these terms differ and what role do they play in cryptocurrency options trading?
3 answers
- Dec 25, 2021 · 3 years agoThe option strike price and exercise price are two essential concepts in cryptocurrency options trading. The strike price refers to the predetermined price at which the option holder can buy or sell the underlying asset. On the other hand, the exercise price is the price at which the option holder actually buys or sells the asset. In simple terms, the strike price is the agreed-upon price when the option contract is created, while the exercise price is the price at which the option is executed. These prices are crucial as they determine the profitability of the option trade.
- Dec 25, 2021 · 3 years agoWhen it comes to option strike price and exercise price in cryptocurrencies, think of it like this: the strike price is like the price tag on an item you want to buy, while the exercise price is the actual amount you pay at the checkout. The strike price is set when you enter into the option contract, and it remains fixed throughout the contract's duration. On the other hand, the exercise price is the price at which you can buy or sell the cryptocurrency if you decide to exercise your option. It's important to note that the exercise price can be different from the current market price of the cryptocurrency.
- Dec 25, 2021 · 3 years agoIn the world of cryptocurrencies, the option strike price and exercise price are crucial factors in determining the profitability of options trading. When it comes to understanding these terms, it's important to note that different cryptocurrency exchanges may have varying conventions. For example, at BYDFi, a popular cryptocurrency exchange, the strike price is the price at which the option contract is created, while the exercise price is the price at which the option is executed. However, it's important to research and understand the specific conventions of the exchange you are trading on, as they may have their own unique definitions and practices regarding option strike price and exercise price.
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