Quantitative trading firm TDX Strategies is offering its clients a bullish bitcoin trade with an interesting financial twist that helps offset the cost of the bet while reshaping the risk profile of the position.
The Hong Kong-based firm on Wednesday suggested a “bullish risk reversal” strategy, which involves selling a put option (insurance against a downtrend) and using the premium earned to buy bullish call options, essentially funding bullish bets with proceeds from writing put options.
This way, the trader pays little or nothing up front and remains exposed to a bitcoin rally.
It reflects a broader shift toward more sophisticated, options-driven positioning as traders look to further stretch their capital and adjust their risk rather than simply accumulating leveraged spot or bullish bets.
A call option is a contract that allows the buyer to bet that the price of an asset will rise above a specific level, called the strike price, on a certain date. If the price rises above that strike price, the buyer can profit; If not, they usually just lose the small fee they paid for the option. It is analogous to buying a lottery ticket.
A put option does the opposite. It allows the buyer to establish protection against a possible fall of the asset below a specific strike price on a certain date. If so, the buyer of the put option will come out ahead; If it does not do so, the entity risks losing the initial premium paid. It is similar to buying insurance.
The play suggested by TDX combines the two such that the trader becomes the seller of out-of-the-money (OTM) put options and collects the premium on one leg, then redistributes it to buy an OTM call option on the other leg.
The result is a low-cost bullish structure compared to simply purchasing a call option directly. An out-of-the-money (OTM) call option is an option whose strike price is above the current market price of Bitcoin, while an OTM put option is one whose strike price is below the current market price.
“The early confirmation of Mojtaba Khamenei as Supreme Leader introduces an added element of risk of an immediate escalation of retaliation; however, we view any headline-driven market jitters as a tactical entry point,” TDX said in a market note.
“We are looking to capitalize on temporary weakness to generate upside exposure in March and April. [expiry]favoring bullish risk reversals (funding OTM call options by selling OTM put options),” TDX added.
The strategy is not without risks. By selling out-of-the-money puts, the trader is obligated to buy Bitcoin at the strike price if the market falls below that level, meaning they end up acquiring the asset at a price above its prevailing market value.
At the same time, while call options offer bullish participation, their high strike prices mean they can expire worthless if the rally fails to meet expectations. In effect, the trader trades a lower initial cost for a more asymmetric reward: a limited upside above the bid price and significant downside exposure below the ask price.
Therefore, the position requires close monitoring and may not be suitable for new investors or those with limited capital and a weak understanding of options dynamics.
