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Joined 3 years ago
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Cake day: August 24th, 2023

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  • This is just like selling / buying options in any other industry, e.g farming to buy something at a specified price in the future.

    They’ve agreed to buy XYZ product at 123 time at a price between $100 and $200.

    If prices plummet, they’ve still agreed to buy it at $100 (similar to selling an options $100 Strike PUT), but if prices skyrocket, they don’t need to pay more than $200 (similar to buying an options $200 Strike CALL)

    Anything in between is just the price, so if it’s $150 then its just $150

    It’s not exactly the same as using options, but the rough idea.