Call option selling involves writing a contract that grants the buyer the right, but not the obligation, to purchase an underlying asset at a specified price before a certain date. The seller receives a premium for assuming the obligation to sell the asset if the buyer exercises the option. This strategy is typically employed when the seller anticipates the underlying asset’s price will remain below the strike price or decline. It carries a risk of substantial loss if the asset price rises significantly.
Context
In crypto markets, call option selling is a method for generating yield on held assets or expressing a moderately bearish market outlook. News often reports on the volume and open interest in these contracts as indicators of market participant positioning and sentiment. A critical future development involves the maturation of decentralized options platforms, offering greater accessibility and transparency for these derivatives strategies.
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