Simple Halving Position Examples

With the upcoming Bitcoin halving event, we would like to give you some inspirations by presenting simple halving position examples. In this article, you will be able to see the pros and cons of each position, as well as good examples of each position.

Long Call

You’re expecting bitcoin to increase in value and want limited risk

• Pros: Simple, limited risk
• Cons: Will drop in value as time passes

Example

Buy 1 BTC-15MAY20-9500-C for 0.018 BTC ($158)

If BTC expires at $7000, then PNL will be -0.018 (-$158)

If BTC expires at $9500, then the PNL will be -0.018 (-$158)

If BTC expires at $12000, then PNL will be 0.1903 (+$2342)

Final Thoughts

• Buying an option has fixed risk
• Selling an option has unlimited risk
• Combinations are very flexible
• You can buy or sell European style options anytime

Short Strangle

You’re not expecting the halving to generate any serious bitcoin move either up or down

• Pros: Wider profit range than a short straddle
• Cons: Lower max profit than short straddle but still unlimited risk

Examples

Sell 1 BTC-15MAY20-10000-C for 0.01 BTC ($87.50)

Sell 1 BTC-15MAY20-8000-P for 0.022 BTC ($192.50)

If BTC expires at $7000, then PNL will be -0.1109 (-$720)

If BTC expires at $9500, then the PNL will be 0.032 (+$280)

If BTC expires at $12000, then PNL will be -0.1347 (-$1720)

Final Thoughts

• Buying an option has fixed risk
• Selling an option has unlimited risk
• Combinations are very flexible
• You can buy or sell European style options anytime