Big day for Bitcoin – How will the options contracts work?

Today is a massive day for the worlds global digital currency!

Much of the digital community wonder what it takes for Bitcoin to go mainstream, Options contracts are a big part of that. Financial institutions are all worried about investing in Bitcoin because of its volatile nature. Options solve this problem as they can act as a hedging tool to reduce said exposure to the extreme price swings. 

How do options work?

Options contracts are a contract to insure that a particular price will be paid for an asset in the future. The buyer of an option can either make sure they pay a certain price for the Bitcoin in the future or let the contract run to expiry and pay the premium. Let’s examine this further. 

You buy a call if you think the price will rise. You buy a put if you think the price will fall.

The strike price is where you think the price of your option could surpass once the contract has expired

Example:

Let’s say you pay $100 for a 1-month call…