What will be your option play Christmas quiz — Announcement of winners
Congratulations to the winners of our options trading Christmas quiz!
Based on the settlement price of 7,165 USD on 27 December, the correct answer which will generate the largest options payoff is
d) Sell put — Earn $1,200
Winners for options quiz — Win 100 USDT each!
- Sparrow ID: ********-****-****-****-********ff1e
- Sparrow ID: ********-****-****-****-********f94e
Reasoning: I am not bullish on BTC but also do not think it will drop below 7.2k (hence selling put for higher premium instead of selling call for higher net gain)
- Sparrow ID: ********-****-****-****-********4fa0
Reasoning: Assuming present price = settlement price, then it provides the best payoff. The 2nd best payoff is to sell the call, which has the best payoff if price declines below $6,930. The initial price of buying the put option is too high relative to selling it (as at 4pm 26 Dec 2019).
Winners for social media (Twitter RT & Telegram) bonus — Win up to 20 SPO!
- ********-****-****-****-********23ae
- ********-****-****-****-********51c9
- ********-****-****-****-********b98d
- ********-****-****-****-********456a
- ********-****-****-****-********21ee
- ********-****-****-****-********257c
- ********-****-****-****-********2518
- ********-****-****-****-********660a
We’ve received divided responses, with only 26% of the participants getting the options quiz right!
Confused about how options work? Here’s a breakdown of the answers.
At a settlement price of $7,165, the trade position which will generate the most ROI based on options payoff will be:
- Sell put — gain $365
- Sell call — gain $130
- Do nothing and HODL — $0 ($165 unrealised profit)
- Buy call — lose $180
- Buy put — lose $265
Sell put — $365 profit
By selling a put option at a strike price of $8,000, you will receive $1,200 premium.
At settlement price of $7,165, your option will be In-The-Money, meaning that you will need to pay the cash difference of your Settlement price and Strike price to the option buyer. Your premium received can help to offset the cash difference.
Cash difference to pay to option buyer: [Strike Price] — [Settlement price]
$8,000-$7,165 = $835
Profit/loss from trade = [Premium received] — [Cash difference paid to option buyer]
$1,200-$835 = $365
Sell call — $130 profit
By selling a call option at a strike price of $8,000, you will receive $130 premium.
At settlement price of $7,165, your option will be Out-The-Money and you will get to profit fully from your premium received.
Profit from trade = Premium received = $130
Do nothing and HODL — $0 ($165 unrealized profit)
If you do not make any trade and decide to HODL your BTC instead, you will not realize any profit from the trade.
If you decide to sell your BTC at market, you will receive $165.
Profit from selling BTC at market = [Settlement price] — [BTC price at market]
$7,165 — $7,000 = $165
Buy call — lose $180
By buying a call option at a strike price of $8,000, you will pay $180 premium.
Since BTC price settled at $7,165, your call option will settle Out-The-Money. Your maximum loss from this trade will be your premium paid.
Loss from trade: -$180
Buy put — lose $265
By buying a put option at a strike price of $8,000, you will pay $1100 premium.
Since BTC price settled at $7,165, your put option will settle In-The-Money. Meaning that you will receive the cash difference of your Settlement price and Strike price from the option seller. Your profit from the trade will be the cash difference received minus your premium paid.
Cash difference received from option seller: [Strike Price] — [Settlement price]
$8,000-$7,165 = $835
Profit/loss from trade = [Cash difference received from option seller] — [Premium paid]
$835-$1,100 = -$265
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Thank you for participating in our options quiz, we hope you’ve learnt more about the benefits of options!
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Terms & ConditionsNotification of Results - 3 lucky winners for the Christmas options quiz will be selected and announced on social media within 10 working days of the conclusion of the campaign- Tokens will be distributed to the Sparrow wallets for the winners of the campaign within 10 working days after the announcement of winners- Sparrow will only communicate via our official channels listed hereDisqualification- Users found to engage in criminal activities shall be disqualified from the promotional campaign- Users found to have breached the terms of service on Sparrow shall be disqualified from the promotional campaign- Sparrow may suspend or terminate accounts found engaging in criminal activities or in breach of terms of serviceSparrow Management Rights- Sparrow reserves the right to unilaterally change the terms and conditions of the campaign, or halt the campaign at its own discretion- Sparrow’s decision in any dispute is finalDisclaimerThe information provided here is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other professional to determine what may be best for your individual needs.Sparrow does not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence.To the maximum extent permitted by law, Sparrow disclaims any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses.Content contained on or made available through any of our communication channels is not intended to and does not constitute legal advice or investment advice and no attorney-client relationship is formed. Your use of the information on any of our communication channels is at your own risk.
