Anyone have thoughts on best ways to hedge crypto positions / profits?

[Nigital Domad]

Hello comrades! I hope many of you are finding yourselves with large paper profits during the current cypto bull run.

I would like to ask the hive mind: What are some good ways you've found to protect / insure those paper profits? I have found some crypto exchanges which have Options trading (where you can buy protective Puts and such), but these type of vehicles do not seem to function the same way Put options in global stock markets function (where you can actually "put" your crypto to the seller of the Put upon exercise).

And Futures trading seems to be only for short term market hedging.

Other than Protective Put Options, has anyone found any other reliable ways to purchase long-term protection or insurance for your cyprto gains / positions?

 

[JohnnyDoe]

European style options are the norm, but otc desks can sell you American style ones.
Anyway, are you sure to understand what your are doing and how to price the contracts?

 

[Nigital Domad]

European style options are the norm, but otc desks can sell you American style ones.
Anyway, are you sure to understand what your are doing and how to price the contracts?

I'm pretty sure I know what I'm doing (famous last words, right?)
I have extensive experience with Puts options in regular equity markets (where 1 option contract equals 100 shares). But since crypto contracts for btc, for example, typically equal .01 btc, it gets harder to figure out what is actually being bought. Does each contract actually control .01 btc? That's what the derivative seems to suggest.

Would you agree that protective Put options are the best way to protect a BTC portfolio, for example? Or are there are derivatives you recommend?

Any good tutorials on the web that help explain the elements of the options trading platforms (not the Greeks, those seem fairly similar to equity markets...unless they're not?)

 

[TheCryptoAnt]

Short your crypto at 1x in an inverse contract (subject to availability of the specific token/coin you are holding tho)

Bonus: you get the collect funding 99% of the time

 

[Nigital Domad]

Thank you! So if I have 500K in BTC, you suggest shorting 500K at 1x btc in Futures?

 

[TheCryptoAnt]

Thank you! So if I have 500K in BTC, you suggest shorting 500K at 1x btc in Futures?

id short around ~85% of your BTC at 1x instead of your whole stack.

There may be some upside still.

 

[Nigital Domad]

id short around ~85% of your BTC at 1x instead of your whole stack.

There may be some upside still.

And you would just let it keep running and collect the funding? Could you leave a Futures bet running for weeks or months like that (like you could Options?)

 

[TheCryptoAnt]

And you would just let it keep running and collect the funding?

yeah, until I think the downside is done.

Could you leave a Futures bet running for weeks or months like that (like you could Options?)

yes, perpetual contracts have no settlement date. Options expire at some point tho so you cannot have them run 'forever'.

 

[Nigital Domad]

Excellent, thank you. I didn't realize the short side of perpretuals usually TAKE the funding. I'll give it a try, thank you!