What is a put potion?
You can think of a put potion as insurance against price drops of the asset it's protecting.
Imagine you hold ETH, or BTC, or any other crypto asset, and are worried there may be a drop in price. You can buy a potion options to insure these assets and put a floor to how much a price reduction can impact you.
In very simple terms, potion options acquire value when the price of the insured asset crosses a certain price point, called "the strike". While price remains above the strike, the value of the option is 0. If price goes below the strike, insurance kicks in and starts paying you.
Here's the payoff structure of a potion put contract:
Put options have a cost, typically referred to as "premium".
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