Crypto Options Trading Strategy: Always Be Prepared For Market Volatility

If you’ve always been curious about how to trade crypto options, you’ve come to the right place. This is a series on crypto options trading where we share some basics as well as several ready-made strategies that you can implement today. 

Whether you’re a new crypto trader, an existing perps trader, or even an advanced options trader – we hope you find this series useful. 

Part 1: What are Options: A beginner’s guide to crypto options 

Part 2: How to Hedge Your PnL Gains: Using crypto options to hedge your perpetual contract positions

Part 3: How to HODL and Generate Yield: Using crypto options to generate yield while hodling your favourite token

Part 4: How to Leverage Market Volatility: Using crypto options to profit during market volatility

Part 4: How to Leverage Market Volatility

TL;DR. Traders can buy a straddle – which involves buying a call and a put option – when they expect a major market move but are unsure of whether it will move up or down. 

Why would you want to do this? You wish to express your market opinion and make profit from trading the market move – independent of the direction of the move. 

Let’s Look At An Example

Say you are currently holding BTC (Bitcoin) or USDC in your wallet. 

The current BTC price is $45,000. 

Based on market analysis, you expect that the BTC price will move sharply before your options’ expiry date.

Despite being unsure whether the BTC price will move up or down, you wish to profit from the coming market movements.

How Can Crypto Options Help?

A way to generate profit with drastic market movements (despite not having a directional view) is called a straddle strategy.

A straddle involves a long put and long call option.

In this scenario, you decide to buy a BTC call option and a BTC put option, both at a strike price of $45,000.

Each option contract costs a premium of $1,000, totalling your cost to $2,000.

Should the BTC price exceed $47,000, you make profit.

Should the BTC price drop below $43,000, you make profit. 

Simply put, all you need is a significant price swing of BTC in either direction to generate a profit.

Ready to start trading crypto options? 

Trade BitMEX Options

Like what you’ve read? We’ve got a range of educational resources on trading crypto Options as well as other derivatives, which you can find here.

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