OCT 4, 2026
4 MIN READ
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Hedging means taking a second position that offsets part of the risk in your first. It doesn’t remove risk, it trades some upside or some money for protection. This lesson covers the main hedging tools and when each one makes sense.
IN THIS LESSON
A hedge reduces risk and always costs something, either premium or capped upside.
A put limits your downside. A covered call or short call pays you to cap your upside. A collar does both.
A stop-loss can be gapped through. An option’s protection can’t.
On Aevo, PERPS+ builds the hedge into a BTC or ETH perps position in one tap.
01
What is a hedge?
A hedge is a position that moves the opposite way to the one you want to protect. If you’re long Ether and worried about a fall, you can take a position that gains when Ether falls. If it does fall, the hedge offsets part of your loss. If it doesn’t, the hedge costs you.
02
Stop-loss against an options hedge
Most perp traders manage risk with a stop-loss. It works until a wick takes the stop out and the market reverses, or until a gap opens through it. An option’s floor is set when you buy it and can’t be gapped through, which is the main reason traders pay for one.
03
The main hedging tools
Tool
What it does
What it costs
Protective put
Sets a floor under your position, upside stays open
The premium
Covered call
Pays you a premium, caps your upside
Gains above the strike
Collar
Floor and cap together
Close to zero net, because the call funds the put
Delta-neutral pair
Long and short exposures cancel, so price direction stops mattering
Funding and basis
04
Seeing the shapes
The chart shows a long position’s profit and loss at expiry, with and without each hedge. Switch between the modes.
A long perp, with and without PERPS+
Illustrative P&L at expiry for a long position entered at 100, with example strikes and premiums. Live pricing depends on market conditions.
05
The cost of hedging
Protection isn’t free, and permanent protection is expensive enough to change a strategy. Three things set the price.
Implied volatility. The more movement the market expects, the more a put costs.
How far you set the floor. A floor close to the current price costs more than one further away.
How long it lasts. Longer protection costs more in total, though less per day.
The common mistake is buying a hedge after a fall, when volatility and the cost of protection are highest. Decide your hedging policy before you need it.
06
Hedging on Aevo
PERPS+ covers BTC and ETH perps, on long and short positions. Limit My Loss is a put, Get Paid to Hold is a covered call, and Lock My Range is a collar. See options hedging.
Cross margin means a hedge in the same account reduces the margin the position needs rather than doubling it. See unified margin.
Aevo OTC quotes options on other assets, strikes and dates the exchange doesn’t list. See OTC trading.
Trading strategies. The strategy guide covers hedges and the systematic strategies around them.
You hold a long ETH perp and want a floor without capping your upside. Which tool fits?
A put sets a floor and leaves upside open. A covered call and a collar both cap your gains above a strike.
Why can a put protect you better than a stop-loss in a fast market?
A stop-loss is an order that can fill far from your level in a gap. An option's payoff is set by its strike.
WHERE TO GO NEXT
To hedge perps with options in one tap, PERPS+ attaches a floor, a ceiling or both to a BTC or ETH perp. If you want the option itself, Aevo is an options dex. For a full reference on crypto trading strategies, from collars to trend following, see the strategy guide. If calls, puts and premium are unfamiliar, options trading explained covers the building blocks.
07
Frequently asked questions
What is hedging in crypto?
+
What is a collar?
+
Does hedging guarantee a profit?
+
What does PERPS+ do?
+
Can I hedge altcoin perps on Aevo?
+
Put the lesson to work
Practice on testnet or start small on mainnet.
Launch Exchange ↗
KEEP GOING
LEVEL
INTERMEDIATE
TIME
12 MINUTES
PRIOR KNOWLEDGE
LESSONS 1 TO 3
WORKED EXAMPLES
ILLUSTRATIVE
LEARN / HEDGING / LESSON 5
This lesson is for education only and isn’t financial advice. Leveraged products can lose more than you expect, quickly. Worked examples are simplified and use illustrative numbers.