Thread by @DeFi_Dad

@intocryptoast @HegicOptions It’s confusing when you check out Investopedia.

🛡Put options offer the literal option to sell ETH at a specific price (called the strike price)
🛡In @HegicOptions, the strike price = ETH price when you buy
🛡You can exercise options until the expiry date (1-8 weeks out)

@intocryptoast @HegicOptions Here’s an example @intocryptoast:

🛡I see ETH up today at $165
🛡I’m not comfortable selling my ETH cuz I’ve done it before and the market always takes off whe I sell
🛡So instead, I’m willing to pay a fee to have the option to sell ETH at $165 if ETH📉

@intocryptoast @HegicOptions 🛡It’s a way to protect my ETH profits
🛡I go to @HegicOptions and I buy protection for 5 ETH for 1 week while ETH is $165
🛡I pay two fees: 2% / week + 1% additionally upfront on the 5 ETH (meaning 0.15 ETH)
🛡Now I have a right to redeem 5 ETH for $165 (so 825 DAI) for 1 week

@intocryptoast @HegicOptions Imagine the price of ETH falls to $150 during the 1 week, I can:

🛡Go back to @HegicOptions and “Execute and Swap” my 5 ETH now valued at 750 DAI, for 825 DAI because of the options (5 x 165).
🛡However, maybe I think the price can go lower, so I just hold my Hegic options.

@intocryptoast @HegicOptions But then instead price skyrockets to $200! What do I do?

🛡Well if the 1 week hasn’t expired yet, I could continue to hope price goes lower than $165 to make a profit
🛡Or if the week has expired, no worries, it just means my options weren’t used since ETH didn’t fall in price.

@intocryptoast @HegicOptions If you buy put options and ETH price goes higher, it’s like complaining “I bought car insurance but I can’t seem to get in a wreck to exercise my right to protection.”💥🚗

Hope it helps! Sorry there’s a lot to consider in options but give it time and lmk if I can help.