Options 101: How to insure your spot holdings? Buying a Put = Getting 'insurance' for your spot assets Life example: You just spent $68,000 on a new car (BTC spot). You're super worried about crashing it next month, so you spend $1,000 on car insurance. The insurance agreement says: 'Within the next month, no matter how wrecked the car gets, the insurance company must buy it back from you for $68,000.' If the car gets totaled (BTC crashes): The insurance kicks in, you get $68,000, and avoid financial ruin. If the car is fine (BTC doesn’t drop or even goes up): The car is still yours, and the $1,000 insurance fee is just the cost of peace of mind. In terms of options: Buying a Put option gives you the right to sell at a high price even if the market crashes. It’s the ultimate tool for hedging against spot price drops.