Protective Put
You hold the coin and fear a crash. You buy "insurance" (a put) that guarantees you can sell no lower than a set price. If it rises you earn as usual; if it falls the insurance saves you and you only lose its cost.
How the Protective Put works
The put sets a floor for the position: below its strike any further drop in the asset is offset by the rising put, so the loss is capped. Above it, you keep participating in the upside, minus the premium paid.
When to use it
When you hold BTC/ETH but fear a sharp drawdown (e.g. ahead of an event) and want insurance without selling the asset. The cost of the insurance is the premium and a small upward shift of the breakeven.
Placing the strike at GEX levels
Place the protective put at the Put Wall. Choose the strike at the Put Wall or just below the Gamma Flip — where negative-GEX territory begins and drawdowns accelerate, so insurance matters most.
That way the position's floor matches the real market structure. The Put Wall and Gamma Flip are computed live in the GEX Terminal — set the protection level in the Position Builder.
When to open, the Greeks and managing the position
Buy it in periods of high uncertainty — before earnings, regulator meetings, or at signs of a trend reversal. The put "insurance" locks in accrued paper profit without selling the asset, so with no immediate tax. Max loss is known up front = (purchase price − strike) + premium, breakeven = purchase price + premium.
Greeks: long vega helps the hedge as IV rises (which usually accompanies a market drop). Management: size the strike and tenor to the protection depth vs cost — the closer to the money, the pricier but sturdier the floor.
FAQ
Yes: below the put strike any further drop is offset, so the maximum loss is known up front.
The premium paid for the put; the position breakeven rises by that amount.
Build the Protective Put on live BTC and ETH quotes in the Position Builder.
Open the Position BuilderRelated strategies
Information is for educational purposes only and does not constitute investment advice. Options trading carries high risk.