We iterated another version in the evening, mainly adding low buy and high sell protection for options. The main function is to spend a portion of the premium to buy put options, reducing losses during BTC's sharp decline. The cost is that the net income received will decrease, and sometimes additional payments will be required. The following are examples of linear options priced in US dollars at 1 BTC with the same expiration date. The premium is assumed to be quoted without any handling fees. 1. Low purchase insurance: For example, selling a put option with an exercise price of $80000 and then buying a put option with the same maturity, quantity, and exercise price of $75000. Assuming selling for $500, buying protection for $100, and earning a net profit of $400. Expired BTC ≥ $80000: There is no expiration difference to be paid for both options, earning this $400. BTC at maturity fell to $70000: the sold option lost $10000, the purchased protection option recovered $5000, and the initial received $400, resulting in a total loss of $4600. If the price continues to decline, the additional gains and losses from the two options will offset each other. That is to say, under the premise of normal settlement of both legs and complete holding to maturity, the maximum loss of this combination is: 80000 − 75000 − 400=4600 US dollars. This is called a bearish credit spread. Take out a portion of the royalty that could have been received and set a limit on the due loss. 2. High selling insurance: For example, if you hold 1 BTC and are willing to sell it at $90000, you can sell the call option at this strike price for money, while buying the put option at $75000 that expires at the same time and covers 1 BTC. Assuming BTC is $84000 when creating a portfolio, selling a call option earns $500, buying a put option costs $100, resulting in a net gain of $400. The profit and loss below are calculated from the value of this BTC at $84000 when the portfolio was established. If BTC rises to $100000 upon expiration: The BTC held has appreciated by $16000, but the call option sold requires a payment of $10000 for the difference, and the put option purchased has not been compensated upon expiration. Adding the initial $400 received, the final profit is: 16000 − 10000+400=6400 US dollars. Even if BTC continues to rise, the newly added spot gains covering the portion will be offset by the newly added losses of call options, and the profit limit at maturity will still be $6400. If BTC still expires at $84000: The spot value did not change, and there was no difference in expiration between the two options, ultimately earning a net receipt of $400. If BTC falls to $60000 upon expiration: Holding BTC incurs a loss of $24000, but a put option of $75000 can compensate for $15000, and the sold call option does not require payment of the difference upon expiration. Plus the initial $400 received, the final loss is: 24000 − 15000 − 400=8600 US dollars. After BTC falls below $75000, the protective option will offset the further decline loss of the corresponding quantity of spot. Therefore, the maximum loss and maximum profit of this portfolio holding to maturity model are $8600 and $6400, respectively. This is called collar combination: by restricting a portion of the rising returns in exchange for falling protection. The decline between $75000 and $84000 still needs to be borne by oneself. The 'insurance' here is all option protection and does not guarantee capital. The above upper limit only applies to the situation where the portfolio is fully held to maturity and settled normally, and in reality, handling fees and margin must also be considered. One @ Gate, trade more markets