Quantitative trading firm TDX Strategies has outlined a bullish options strategy for clients that seeks to capture a potential rally in Bitcoin while reducing the upfront cost of the trade through a financing mechanism.
The Hong Kong-based firm recommended a bullish risk reversal on Wednesday, a structure that involves selling a put option and using the premium received to fund the purchase of a call option. The setup allows traders to maintain upside exposure to bitcoin with little or no initial cost.
The trade is designed to build bullish positioning around March and April option expiries. By writing a put—effectively providing downside insurance—traders collect income that can then be redeployed to purchase a call option, which benefits if bitcoin’s price rises.
The strategy reflects a growing trend among sophisticated market participants who are increasingly relying on derivatives to optimize capital efficiency rather than simply buying spot bitcoin or taking straightforward leveraged long positions.
A call option gives the holder the right to buy an asset at a specified strike price before a set expiration date. If the market price rises above that strike, the buyer can profit from the difference. If the price remains below it, the option expires worthless and the buyer loses the premium paid.
A put option, on the other hand, provides downside protection by allowing the holder to sell the asset at a predetermined strike price. If the market falls below that level, the option gains value; if not, the premium paid for the contract is forfeited.
TDX’s proposed trade combines both elements. The trader sells an out-of-the-money (OTM) put option—one with a strike price below the current market level—and collects the premium. That premium is then used to purchase an OTM call option with a strike price above the current price, creating a relatively low-cost bullish structure.
“The anticipated confirmation of Mojtaba Khamenei as Supreme Leader introduces an added element of risk of immediate retaliatory escalation; however, we see any headline-driven volatility as a tactical entry opportunity,” the firm said in a market note.
TDX added that it intends to “capitalize on temporary weakness to build upside exposure into March and April expiries,” favoring risk reversals where bullish calls are financed by selling OTM puts.
The structure, however, comes with notable risks. By selling a put option, the trader takes on the obligation to purchase bitcoin at the strike price if the market drops below that level. In a sharp sell-off, this could result in buying the asset above its prevailing market value.
At the same time, the call option purchased to capture upside may expire worthless if bitcoin fails to rise beyond the strike price before expiration.
As a result, the strategy trades lower upfront costs for an asymmetric payoff profile—potential participation in a rally alongside meaningful downside exposure if prices fall sharply below the put strike.
Given these dynamics, the position requires careful risk management and is generally more suitable for experienced traders who understand options markets rather than investors with limited capital or familiarity with derivatives.
