Re: Crypto volatile again, Whats stopping you from trying Options Trading?
No, this type of leverage trading requires your account to be secured. If it exceeds the limit, your account will be burnt and everything will disappear. It's not as simple as you think, if making money is too easy, the whales were definitely involved in this type of transaction first. so I don't really like this kind of risky trade.
Hello! Let me try and help to clear some misconceptions
We all know that flash crashes are very common in this volatile crypto market. The volatility in the crypto market means that overly leveraged traders and investors will have to constantly face the problem of margin call, premature liquidation and large unforeseen losses.
However, the beauty of buying options is that risk is just limited to the premium you pay while you still get to enjoy leveraged returns on your position. Sparrow options, being covered, helps to further protect users positions.
Let me give you an example:
If you forked out $1,000 Premium Payable for a 1 BTC buy Put position at a Strike Price of $10,000 and BTC settles at $12,000, your risk from the trade is just capped at your Premium Payable. In comparison, if you short BTC futures and BTC settles at $12,000 from $10,000, your loss will be $2,000 and potentially uncapped depending on how much BTC rallies.
Likewise, if BTC settles at $8,000 from your 1 BTC buy Put position at a Strike Price of $10,000, you will profit $2,000, which is 200% returns from your $1,000 Premium Payable.
This is as compared to shorting BTC at $10,000. When the price reaches $8,000, your profit is still $2,000, which is a mere 20% return from your $10,000 position. You also risk your whole capital by placing this trade, as compared to buying a Put option where your risk is limited to your Premium Payable.
Especially in this volatile crypto market, buying Put options will be your best bet if you want to take advantage of a bearish move.