Institutions increasingly using bitcoin options playbook for altcoins

Source: CryptoNewsNet Original Title: Institutions are increasingly using the bitcoin options playbook for altcoins: STS Digital Original Link: Institutions are increasingly using proven bitcoin options techniques on alternative cryptocurrencies to protect against price swings and earn extra returns, according to digital assets derivatives traders.

“Our client base includes token projects and foundations, investors with large holdings, and asset management firms managing exposure ahead of liquidity events,” said a co-founder and CEO of a principal trading firm. “Increasingly, we’re also seeing these participants apply option strategies that were historically used in Bitcoin to the altcoin space.”

Options are derivative contracts that give the purchaser the right, but not the obligation, to buy or sell the underlying asset at a predetermined price at a later date. A call option represents a bullish bet, giving the purchaser the right to buy the asset at a specified price at a later date. A put option represents a bearish bet, protecting the buyer from a price decline.