Buying options
It is likely that the exchange-rate risk relative to the dollar or euro will be managed in the future not by a stablecoin but instead by financial options—derivatives giving the user the option, but not the obligation, to buy or sell an asset. Users looking to manage risk will pay a slight premium to buy protective puts against their cryptocurrency positions.
A put is the right to sell an asset at a specific price. A protective put is a put purchased against an asset you already own, for less than it's worth now. In the event that the price of an asset drops below the strike price, which is the price at which an option can be executed, the option can be used to secure a greater price for the underlying asset.
The problem with ...
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