The Cryptocoin Insurance Company will be launching its ICO on November 1. The Blockchain startup company will be the first of a kind since it will allow clients to insure their Cryptocurrency deposits from slumps. This will be appropriate for revamping Crypto markets investments momentum as many people will be seeking to participate in options transactions for Digital Assets. Cryptocoin Insurance Company is already being named as the first Crypto exchange that offers trading options.
Firstly, What Are Options?
The concept of options in trade entails the freedom of a trader to buy or sell a given asset at a restricted timeframe on an agreed price. It is important to note that it gives the trader the right to transact as per an agreement rather than being an absolute obligation under the contractual law.
In the perspective of Cryptocurrency investments, an option is a transaction where an investor promises a peer on a network that they will purchase a given number of Digital Assets on a given data at a set price. This model is beneficial to the individual or institutional buyers who may not be having enough investments funds. However, a down payment has to be paid as a show of good faith.
A Buyer Has The Right To Purchase Digital Assets But At A Cost
If before the given date of purchase an unexpected event happens and the value of Crypto Assets shot up, the buyer is poised to benefit from the difference between the agreed price and the market value at the prevailing time. Having bought the option, the trader has the right to purchase the Digital Tokens at maturity of the agreement.
On a different scenario, the value of the Digital Asset may plunge making it uneconomical for the buyer to make the purchase. Under such circumstances, the prospective investor may decline to make the purchase since the contract does not entail an obligation. Under such, the entity or individual is deemed to have forfeited the down payment that now serves as the cost of the option.
Under the perspective of options, there is the aspect of “call” and “put.” In the latter, a contract holder is given a time frame and a set cost to buy a Digital Asset as they anticipate for the price to fall. On the former, the time frame is limited and a promise is made, However, the contract holder still maintains the right to purchase or not to without any obligation.
Cryptocoin Insurance Blockchain Will Merge Exchange Services And Options Trading
Cryptocoin will be at the center of proffering a form of speculative trading in the Cryptocurrency market environment. Under this category, people will be buying options for Crypto Assets that are deemed as likely to break out on a bear run such as BTC, XRP, or ETH. This strategy differs from binary options that many people seek to avoid due to the high risks that they pose. Rather, it the options will be available on Cryptocoin as speculative investments.
Meanwhile, Cryptocoin has to construct algorithms to facilitate a statistically correct analysis of the Crypto markets. This is set to be daunting tasks as Crypto markets are largely volatile and unpredictable due to factors such as ambiguous regulations, negative media publicity, security risks, and lack of public awareness.