Quantitative trading firm TDX Strategies has proposed a bullish options trade designed to capture a potential rally in Bitcoin while reducing the upfront cost of the position through a financing mechanism.
In a note shared with clients on Wednesday, the Hong Kong–based firm recommended a bullish risk reversal strategy aimed at building upside exposure for March and April expiries. The approach involves selling a put option and using the premium collected to purchase a call option, effectively funding the bullish bet.
By writing the put and collecting the premium, traders can offset or even eliminate the cost of buying the call option. The structure allows investors to maintain exposure to a potential bitcoin rally without committing significant capital at the outset.
The strategy highlights a broader shift among sophisticated traders toward options-based positioning. Rather than relying solely on spot purchases or straightforward leveraged long positions, market participants are increasingly turning to derivatives to improve capital efficiency and better manage risk.
A call option gives the buyer the right to purchase an asset at a predetermined price—known as the strike—before a specified expiration date. If the market price moves above that level, the buyer can profit from the difference. If not, the option expires worthless and the buyer loses only the premium paid.
A put option works in the opposite direction. It allows the holder to sell the asset at a predetermined strike price before expiration, offering protection against a decline in price. If the market does not fall below the strike, the premium paid for the option is lost.
TDX’s recommended structure combines these two instruments. The trader sells an out-of-the-money (OTM) put—an option with a strike price below the current market price—to collect premium income, then uses that premium to buy an OTM call with a higher strike price.
“The anticipated confirmation of Mojtaba Khamenei as Supreme Leader introduces an added element of risk of immediate retaliatory escalation, however, we view any headline-driven market jitters as a tactical entry point,” TDX said in a market note.
The firm added that it aims to “capitalize on temporary weakness to build upside exposure in March and April expiries, favoring bullish risk reversals funded by selling OTM puts.”
Despite the attractive cost structure, the strategy carries notable risks. By selling an out-of-the-money put, the trader commits to buying bitcoin at the strike price if the market falls below that level, which could result in purchasing the asset above its prevailing market value during a sharp downturn.
Meanwhile, the call option purchased to capture upside may expire worthless if bitcoin fails to rally above its strike price before expiration.
In essence, the strategy exchanges lower upfront costs for a more asymmetric payoff profile—offering participation in potential upside moves while exposing the trader to meaningful downside risk if the market declines significantly.
Because of this risk profile, the trade requires active monitoring and is generally better suited for experienced traders with a strong understanding of options markets rather than newer investors with limited capital.
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