Weekly Crypto Options are derivative contracts that grant the holder the right, but not the obligation, to buy or sell a specified cryptocurrency at a predetermined price on a specific weekly expiration date. These instruments offer short-term leverage and hedging capabilities for crypto investors.
Mechanism
These options operate like their traditional finance counterparts, with contracts expiring every Friday, providing frequent opportunities for traders to speculate on or hedge against immediate price movements. Their value is influenced by the underlying asset’s price, strike price, time to expiration, and implied volatility, with settlement often occurring in the underlying cryptocurrency or a stablecoin.
Methodology
The strategic application involves using weekly options for short-term directional bets, yield generation through covered calls or cash-secured puts, or precise hedging against near-term market events. Institutional participants leverage these instruments within RFQ systems for tailored exposures and employ sophisticated risk management models to manage gamma and theta decay effectively.
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