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How do crypto options contracts affect the market?Hi Friends Today we will explain the option contracts affect on crypto and other markets. First lets see whats an option contract? Options are derivative contracts that entitle the purchaser to buy or sell the connected asset at a predetermined price before the contract expires. There are two types of options , call and put. The right to buy is known as a ‘call’ option, whereas the right to sell the underlying asset is called a ‘put’ option. Every options contract comes with a specified expiry date which is the last date for settling the contract. The price at which the options contract is settled is called the strike price . This is the price at which the options contract owner is allowed to buy/sell the underlying cryptocurrency. The price at which an options contract is bought is called the premium . Now, when would you buy a cryptocurrency? Obviously when it is trading at a price that is lower than it should be,right? This means that you find it to be undervalued and you expect its price to rise in the future so you can sell higher and make money. But what if the crypto price fell instead? Wouldn’t it be nice if somebody would still buy the cryptocurrency from you at a higher price? For that you would require selling rights of the cryptocurrency and you will buy a put option. Now on the flip side when would you sell a cryptocurrency? Of course, when you think that it is trading at a price higher than it should be. This means that you find it to be overvalued and expect it to fall from here. But what if the price of the cryptocurrency rose instead? You would then want to add more crypto at a lower price and sit on assets that are valued higher than your purchase price. For this you would need buying rights or a call option. Since options allow traders the right to buy/sell assets at a predetermined price they shield them from the volatility of the crypto markets. Moreover the volume of the call or put options in the market signals the direction in which investors expect the markets to move. More put options indicate that investors expect the markets to fall whereas more call options indicate that investors expect the market to rally. Now when the option contracts are near their expiration date, large players try to drive the underlying crypto price into a favourable range depending on the option contracts they have purchased. This is done so that the deal can become profitable. In summary: Buying a Call (Long) = Bullish -----> you think the crypto will be worth more later so you want to lock in todays price to buy later at a profit. Selling a Call (Short) = Bearish -----> you think the crypto will be worth less later so you want to lock in todays price to sell later at a profit. Buying a Put (Short) = Bearish ------> you think the crypto will be worth less later so you want to lock in todays price to sell later at a profit. Selling a Put (Long) = Bullish --------> you think the crypto will be worth more later so you want to lock in todays price to buy later at a profit. I hope you enjoy this education please share me your opinions in comments. thank you all specially @TradingView team
CRYPTOCAP:BTCEducation
by TraderAmin-KZ
When ETH flips BTCJust two squiggles crossing each other. NFA Crypto is highly circular. It will return, but requires a lot of time for people to recover from their losses during 2020-21. Considering poor Macro conditions, it could take longer, but the asset class is becoming more mature so I think there will be faster cycles. Not confident that BTC will reach ATH after losing the number one spot to ETH. ETH becomes 1T asset by 2025. Vitalik wins the nobel prize for economics in 2030s.
CRYPTOCAP:BTCLong
by hansolar21
BTC/SPX relationshipCrypto is trying to hold the area it is in compared to stocks - holding the support and trying to form a double bottom - Too early to say it is successfull, because fear is still out there - but it is a really good spot to start DCA'ing into Crypto as there are high chances of bouncing up even stronger that stocks will - and that is mainly because when investors will open up to the idea of buying in, they will go big time into risky-assets. That's the idea.
CRYPTOCAP:BTCLong
by TheSecretsOfTrading
BTC/SPX 23/08/22BTC/SPX is looking good. All parameters (indicators) are looking exhausted after reaching major supports and we are now at the top of the descending chanel - Very possible we will break out, therefore crypto would outperform stocks for some time. This can happen in both ways - either stocks will go down and crypto will hold price, or stocks will consolidate and crypto will pump. I'm still bearish long term, but a push up is possible for bitcoin judging by this chart.
CRYPTOCAP:BTCLong
by TheSecretsOfTrading