Long Put

Explore the Long Put strategy. This guide covers the basics of this popular options trading strategy, including its risks, rewards, and structure.

Directional exposure


Risk level


Volatility exposure:



Buying a put means paying for the right to sell the crypto underlier at a given price (strike). Options are cash-settled, and we support multiple crypto-base currencies. For example, with USDC-settled options, the payoff is the difference between the strike and the USDC value of the underlier at expiration. The main benefit of buying a put, as opposed to shorting the underlying crypto directly, is that if the underlier does not move in the direction you expect, the most you can lose is the cost of the put (the premium).

DeVol Trading Tip: Buy a put if you expect the value of the underlier to end up below the strike at expiration, enough to cover the cost of the put (i.e. the premium paid) and make a profit.


BTC is currently trading at BTC/USDC 40,000. You buy one BTC ATM put option with a strike of BTC/USDC 40,000 and a one-week maturity. Implied volatility is 4% over the time to expiration (one week). The expected range for BTC at expiration, given six standard deviations, is BTC/USDC 31,385 to 50,980. Assume that the option is USDC-settled. Consider the following possibilities and associated payoffs when the option expires:

In over 99% of the outcomes, there is only a small discrepancy between the DeVol settlement vs. what a traditional option would pay. As this example illustrates, this discrepancy can resolve itself in the trader’s favor or against.

In the event of a very large, unusual decrease in BTC price that falls outside of the expected range (far in the tail), this discrepancy becomes more significant. For example, if BTC halves in a week and ends up trading at BTC/USDC 20,000, your payoff is capped to USDC 8,535. Why? This is because the DeVol protocol is fully collateralized, ultimately making for a safer exchange and trading experience. Settlement is based on BTC/USDC 31,385 as the minimum expected BTC price. If BTC ends up at BTC/USDC 0, the payoff would still only be USDC 8,535. Even though BTC is a volatile asset, we think an extreme event like this is as likely to happen as Dr. DeVol not being able to solve a quadratic equation and chew gum at the same time.

Definitions & Payout

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