What strategies can investors use to profit from a short squeeze in the crypto market?

1 answers

• Sophia HernandezDec 20, 2024 · a year ago
  One popular strategy among experienced investors is to use options contracts to profit from a short squeeze in the crypto market. Options contracts give investors the right, but not the obligation, to buy or sell a cryptocurrency at a predetermined price within a specified time frame. During a short squeeze, investors can purchase call options, which give them the right to buy the cryptocurrency at a specific price. If the price of the cryptocurrency surges due to the short squeeze, investors can exercise their call options and buy the cryptocurrency at a lower price, then sell it at the higher market price, pocketing the difference as profit. This strategy allows investors to limit their downside risk while potentially benefiting from significant price increases during short squeezes.
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