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PUT & CALL
PUT Option
Put options are generally related to the fall of value of the underlying. Because traditionally a put option would allow you to sell (PUT) the underlying at the pre-agreed strike price, they would be exercised when the value of the underlying was low.
There may be some difficulty to understand the idea of a put option when the underlying is non-tradable - like a block difficulty. You cannot buy or sell a block difficulty but you can still track whether it is falling or rising. If we define a put option on block difficulty then we expect that it is when it is below the strike level.
CALL Option
Call options are generally related to the growth of value of the underlying. Because traditionally a call option would allow you to buy (CALL) the underlying at the pre-agreed strike price, they would be exercised when the value of the underlying was high.
There may be some difficulty to understand the idea of a call option when the underlying is non-tradable - like a block difficulty. You cannot buy or sell a block difficulty but you can still track whether it is falling or rising. If we define a call option on block difficulty then we expect that it is when it is above the strike level.
Last modified 2mo ago
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