Quant-powered trading firm TDX Strategies provides clients with a bullish bitcoin trade with an interesting funding twist that helps offset the cost of the bet while reshaping the position’s risk profile.
The Hong Kong-based firm on Wednesday proposed a “bullish risk reversal” strategy, which involves selling a put option (insurance against a downtrend) and using the earned premium to buy bullish call options – essentially financing bullish bets with proceeds from put writing.
In this way, the trader effectively pays little or nothing up front while remaining exposed to a bitcoin rally.
It reflects a broader shift towards more sophisticated, option-driven positioning, as traders seek to further stretch their capital and fine-tune their risk rather than simply piling into spot or outright bullish leveraged bets.
A call option is a contract that lets the buyer bet that the price of an asset will rise above a certain level, called the strike price, on a certain date. If the price climbs above this strike, the buyer can profit; if it doesn’t, they usually just lose the small fee they paid for the option. It is analogous to buying a lottery ticket.
A put option does the opposite. It lets the buyer set up protection against a potential fall in the asset below a specific strike price on a specific date. If it does, the put buyer will win; if it does not, the company risks losing the original premium paid. It is similar to buying insurance.
TDX’s proposed play combines the two in such a way that the trader becomes the seller of out-of-the-money (OTM) puts (insurance) and collects the premium on one leg, then repositions it to buy an OTM call on the other leg.
The result is a low cost bullish structure compared to simply buying a call outright. An out-of-the-money (OTM) call is an option whose strike price is above the current market price of Bitcoin, while an OTM put is one whose strike price is below the current market price.
“The expected confirmation of Mojtaba Khamenei as Supreme Leader introduces an additional element of risk of immediate retaliatory escalation, but we view any headline-driven market turmoil as a tactical entry point,” TDX said in a market note.
“We are looking to take advantage of temporary weakness to build upside exposure in March and April [expiry]that favors bullish risk aversion (funding OTM calls by selling OTM puts),” TDX added.
The strategy is not without risk. By selling out-of-the-money puts, the trader is obligated to buy Bitcoin at the strike price if the market crashes below this level, meaning he ends up acquiring the asset at a price higher than its prevailing market value.
At the same time, while the calls offer upside participation, their high strike prices mean they can expire worthless if the rally fails to live up to expectations. In effect, the trader trades a lower upfront price for a more asymmetric payout: limited upside above the call strike and meaningful downside exposure below the put strike.
The position therefore requires close monitoring and may not be suitable for new investors or those with limited capital and a weak grasp of options dynamics.
