Why is the intrinsic value of a put option considered to be zero if the option is related to a digital currency?

3 answers

• Cates WaddellOct 20, 2023 · 2 years ago
  The intrinsic value of a put option is determined by the difference between the strike price and the current market price of the underlying asset. In the case of a digital currency, which is highly volatile and lacks a physical asset, the intrinsic value of a put option is considered to be zero because there is no tangible value to protect against. The option holder would not exercise the option to sell the digital currency at a lower price when they can simply sell it at the current market price. Therefore, the intrinsic value of a put option related to a digital currency is effectively zero.
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• jaelOct 11, 2020 · 5 years ago
  When it comes to digital currencies, their value is solely based on market demand and speculation. Unlike traditional assets like stocks or commodities, digital currencies do not have any inherent value or physical backing. This makes it difficult to determine the intrinsic value of a put option associated with a digital currency. Since the value of a put option is derived from the difference between the strike price and the market price, and digital currencies lack a fixed underlying value, the intrinsic value of a put option related to a digital currency is considered to be zero.
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• mindtJul 09, 2024 · a year ago
  In the case of digital currencies, such as Bitcoin or Ethereum, the intrinsic value of a put option is typically considered to be zero. This is because digital currencies are purely digital assets that do not have any underlying physical value or cash flow. The value of a put option is derived from the difference between the strike price and the market price of the underlying asset. Since digital currencies do not have any tangible value or cash flow, the intrinsic value of a put option related to a digital currency is effectively zero. However, it's important to note that the perceived value of a digital currency can still fluctuate based on market demand and investor sentiment.
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