Quant-focused trading firm TDX Strategies has outlined a bullish options strategy aimed at capturing potential upside in Bitcoin while keeping the upfront cost of the position relatively low.
In a note sent to clients on Wednesday, the Hong Kong-based firm recommended a bullish risk reversal structure designed to build exposure to a potential rally during the March and April options expiries. The strategy involves selling a put option and using the premium received to finance the purchase of a call option.
By collecting income from the put sale and redeploying it into a call, traders can establish a bullish position with minimal initial capital. The structure effectively shifts the cost of the upside bet to the premium earned from selling downside protection.
The recommendation reflects a broader trend among professional traders toward increasingly sophisticated derivatives strategies. Instead of simply buying spot bitcoin or using straightforward leveraged positions, many market participants are turning to options to improve capital efficiency and refine their risk exposure.
A call option gives the buyer the right to purchase an asset at a predetermined strike price before a specific expiration date. If the asset’s market price rises above the strike, the option can generate profit. If not, the contract typically expires worthless, and the buyer loses the premium paid.
A put option works in the opposite direction. It allows the buyer to sell an asset at a fixed strike price before expiration, offering protection against price declines. If the market does not fall below that level, the premium paid for the put is forfeited.
In TDX’s proposed structure, the trader sells an out-of-the-money (OTM) put—meaning the strike price sits below the current market level—and collects the premium. That premium is then used to purchase an OTM call, whose strike price is set above the current market 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 volatility as a tactical entry point,” the firm said in a market note.
TDX added that it is seeking to “capitalize on temporary weakness to build upside exposure for March and April expiries, favoring bullish risk reversals funded by selling OTM puts.”
While the structure reduces upfront costs, it also introduces significant risks. Selling an out-of-the-money put obligates the trader to buy bitcoin at the strike price if the market falls below that level. In the event of a sharp decline, this could result in acquiring the asset above the prevailing market price.
At the same time, the call option purchased in the strategy could expire worthless if bitcoin fails to rally beyond its strike price before expiration.
The result is a trade-off: lower initial cost in exchange for an asymmetric payoff structure, offering participation in potential upside while leaving the trader exposed to downside risk if the market drops significantly below the put strike.
Because of these dynamics, the strategy requires careful monitoring and is generally better suited for experienced traders who understand options markets rather than investors with limited capital or familiarity with derivatives.
