How does a short call option work in the context of digital currencies?

1 answers

• Stanley WichmannDec 11, 2024 · 7 months ago
  In the context of digital currencies, a short call option involves selling a call option on a digital currency that you do not own. This strategy allows you to collect a premium upfront, but it also comes with the risk of potential losses if the price of the digital currency rises above the strike price. If the price remains below the strike price, the option expires worthless and you keep the premium. However, if the price exceeds the strike price, you may be obligated to sell the digital currency at the strike price, resulting in a loss. It's important to carefully consider your risk tolerance and market conditions before engaging in short call options trading in the digital currency market.
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