The covered strangle strategy involves the investor holding Bitcoins in the spot market while simultaneously selling an out-of-expiration (OTM) call option at a price above market value (known as the strike price) and selling an off-expiration put option at a price also below market value. It may sound complicated here, but the logic is actually simple. By selling the call option, you are essentially promising to sell Bitcoin to the other party if the Bitcoin price rises above a certain level. In return, you receive a fee called option premium. By selling the put option, you promise to sell Bitcoin to the other party at the price they want if the Bitcoin price falls below a certain level. In return, you earn an option premium.

So what is the benefit of this strategy to the investor? First of all, there is the option premium gain. When you sell the call option, you can earn an extra return of 11%. You can also earn a return of around 6% by selling the put option. In this way, you can profit from option premiums even if the Bitcoin price remains horizontal.

In the strategy suggested by 10X, it is recommended to sell a $100,000 call option and a $50,000 put option at 50% above the current market price of Bitcoin and keep the Bitcoins without disposal until maturity in December 2024. Markus Thielen, founder of 10X Research, explains this strategy as follows: “The best strategy we recommend is to buy Bitcoin spot, sell a call option with a strike price of $100,000, and sell a put option with a strike price of $50,000. This way, we will be profitable no matter where the Bitcoin price is in December.” “Either the Bitcoin price rises and we earn from option premiums, or the price falls and we sell Bitcoin at $50,000 using the put option.”

This strategy is especially preferred when the market outlook is optimistic but the upward trend is expected to follow a slow course. In such cases, option prices lose value as they approach maturity and option sellers benefit. But of course, this strategy also has risks. The important point is that the Bitcoin price may fall below the price at which you sold the put option. In this case, the Bitcoin you hold will lose value and you may have to sell Bitcoin for $ 50,000 to the person using the put option. As stated in the statement of the investment firm Fidelity, in this case your losses will be twice the losses you will experience only in the covered call position.

To summarize, the closed strangle strategy suggested by 10X is suitable for investors who believe that Bitcoin’s bull market will continue slowly and the price will not fall below $50,000 even if there are corrections. However, when implementing this strategy, it is necessary to consider market risks and have a high risk tolerance.