Put
Put Options
A put option on Nexo Options is an on-chain contract that gives the buyer the right, but not the obligation, to sell ETH or BTC at a fixed price within a defined period of time. This makes put options a useful tool for traders who expect the price of an asset to decline.
How Put Options Work
When creating a put option contract, the buyer selects:
Size: The number of option contracts being purchased.
Period: The duration (in days) the contract will remain valid.
Strike Price: The pre-determined price at which the buyer has the right to sell the asset.
The premium is calculated based on the selected size, period, and strike price. The buyer then pays this premium in USDC.e from their wallet. In return, they receive an ERC721 option token, which represents ownership of the put option.
After blockchain confirmation, the buyer can exercise the option at any point before expiration by using the ERC721 token.
A put option is considered a bearish instrument, as buyers profit when the asset’s price decreases during the life of the contract.
How to Exercise a Put Option
To exercise a put option:
The buyer sends the ERC721 option token back to the Nexo Options protocol.
The protocol automatically calculates the profit and transfers the corresponding USDC.e to the buyer’s wallet.
Key Conditions
The contract must be exercised before expiration.
The asset’s market price must be below the strike price for the put option to be profitable.
All Nexo Options contracts are cash-settled, meaning profits are always paid in USDC.e rather than the underlying ETH or BTC.
Available Periods
Put option contracts can be acquired with durations ranging from 7 days up to 90 days. This flexibility allows traders to plan for short-term moves or longer-term bearish outlooks.
Available Strike Prices
Buyers can choose from four strike prices for ETH or BTC put options:
ATM (At-the-Market): Equal to the current market price.
OTM (Out-of-the-Money): Three strikes lower than the market price.
Market Price − 10% = OTM Put Strike #1
Market Price − 20% = OTM Put Strike #2
Market Price − 30% = OTM Put Strike #3
Example with ETH
Assume the current ETH price is $4,200.
ATM Put = $4,200
OTM #1 = $4,200 × 0.9 = $3,780
OTM #2 = $4,200 × 0.8 = $3,360
OTM #3 = $4,200 × 0.7 = $2,940
If ETH falls to $3,000 before expiry, a put option with a strike price of $3,780 would be in-the-money, providing the buyer with significant profit after accounting for the premium.
Why Use Put Options on Nexo Options?
Hedging: Protect your portfolio against falling ETH or BTC prices.
Speculation: Profit directly from bearish moves in the market.
Defined Risk: The maximum loss is limited to the premium paid.
Flexibility: Choose between short- and long-term contracts with multiple strike price options.
Important Notes
Strike prices are automatically adjusted as the market moves, keeping a range of about −30% to +30% relative to the current price.
Put options give traders a direct and efficient way to benefit from downside moves while keeping risk controlled.
OTM Put Options can only generate profit if the underlying asset falls below the chosen strike price.
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