Crypto Options Becoming Investors’ Choice
Cryptocurrency options are yet to be fully embraced, but of late it is becoming the choice among institutional and retail investors globally. While the global economy is still reeling from the effects of the 2020 pandemic necessitating a transition from the traditional financial system towards the decentralized economy being ruled by cryptocurrencies and other digital assets.
As the centralized economy looks to pick up the pieces from where it left off, the cryptocurrency space is now out in the open setting the pace for innovations and technological advancements. Cryptocurrencies are now on the lips of asset management firms like Grayscale, investment banks and other traditional financial institutions. In fact, they have become the chief cornerstone, which was initially the rejected stone. The tide of vast crypto adoption has swept up a new vista- crypto options- for investors to look into.
Options Explained
Options are based on the value of an underlying asset. They are contracts which afford investors the opportunity or right to buy an asset at a fixed price at a future date or time. However, they are not obligated to buy the asset before the date of the contract expires. So options are more like investors gambling or placing bets on the price movements of assets.
If they think the asset will increase in price, they can buy call options of such asset of which when the price actually increases, they are in profit. In contrast, if an investor thinks that the price of an asset will decrease in price, he can buy put options that will give him profit when the price of such asset actually declines.
The cryptocurrency market can be really volatile, especially now that the market has gone haywire. Most altcoins crashed by over 50% and are struggling to recover before surpassing their previous ATHs. Options are the black knight in the gloomy situation the crypto market currently finds itself in.
With options, investors are able to expose themselves to wider leverages at a reduced margin.
Options enable investors to take advantage of the volatility in the market even from a little margin while splitting their portfolios and opening more positions. They also suffice as investment products for managing risks.
While more large-scale investors are looking to get into the crypto space, their sights are also set on crypto options. The fact that they can turn the market’s volatility to a benefit for themselves is a major attraction. Since they do not have to own the underlying asset, they are protected against the high risks involved and are able to enjoy more returns. Even when the markets are bearish, it does not deter investors as the volume of transactions recorded is still high, especially during a time like this.
Goldman Sachs to Make Ethereum Options Available for Investors
While Bitcoin options has been the black horse of most institutional investors with Grayscale BTC Trust accounting polling over 100,000 BTC, second most popular crypto, Ethereum is attracting the attention of these investors. In light of this, Goldman Sachs has revealed that it will provide Ethereum Options trading for investors. Retail investors can also take advantage of the proposed offering.
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