As Bitcoin (BTC) continues its strong upward momentum, recently breaking above $126,000, traders are adopting more sophisticated strategies to manage risk and capture potential profits. With optimism returning to the market, attention has turned to options-based approaches particularly call spreads as a way to participate in the rally while keeping costs under control.
Call spreads have become a favored strategy among traders looking to take advantage of Bitcoin’s potential upside. Markus Thielen, founder of 10x Research, noted that buying out-of-the-money (OTM) call options or structured call spreads allows participants to gain exposure to upward moves without overpaying for implied volatility. In essence, a bullish call spread involves purchasing a call option at a lower strike price and selling another at a higher one, providing a cost-efficient way to position for gains while limiting downside risk.
However, traders remain aware of possible market corrections. Profit-taking could trigger short-term pullbacks, but the use of call spreads continues to rise as a tool for risk management. Lin Chen, head of Asia business development at Deribit, highlighted strong activity in both short- and long-dated call spreads, suggesting a broader diversification of strategies aimed at balancing returns and volatility.
Another emerging approach involves funding call spreads with put options, as explained by Greg Magadini, director of derivatives at Amberdata. Writing lower-strike puts can generate income to finance the cost of call spreads, though this method carries the risk of having to purchase Bitcoin if prices fall below a certain level.
In the long run, historical data still favors simply holding Bitcoin as one of the most effective investment methods. Yet, combining tactical derivatives strategies with a long-term perspective can offer a balanced way to navigate the crypto market’s swings. With tools like call spreads and option-based funding mechanisms, traders are better positioned to capitalize on Bitcoin’s volatility while maintaining disciplined risk control.