10X Research Suggests New Strategy for Bitcoin Investors Seeking Extra Income
The post 10X Research Suggests New Strategy for Bitcoin Investors Seeking Extra Income appeared first on Coinpedia Fintech News
As Bitcoin’s market evolves, 10X Research proposes a new strategy for investors to increase returns. Known for its accurate predictions, 10X Research suggests using the “covered strangle” options strategy to earn extra income while holding Bitcoin in the spot market. What does this mean for investors, and how does it work?
How the Covered Strangle Strategy Works
The covered strangle strategy involves selling a call option, which provides protection against price rallies, and selling a put option, which acts as insurance against downtrends. This approach allows investors to earn premiums from both options, increasing their overall yield.
Specifically, Markus Thielen, founder of 10X Research recommends selling a call option with a $100,000 strike price—50% above Bitcoin’s current market rate—and a put option with a $50,000 strike price. Both options are set to expire in December 2024.
This strategy offers a potential 17% downside buffer or 17% more yield, depending on where Bitcoin closes in December. It is particularly suited for a bullish market outlook where the uptrend is expected to be gradual, keeping implied volatility low.
Downside of This Strategy
However, this strategy comes with significant risks. If Bitcoin’s price falls below the $50,000 strike price of the put option, both the long Bitcoin position and the short put position would incur losses, doubling the potential percentage losses compared to a simple covered call strategy.
As of now, bitcoin is currently trading at approximately $66,890, reflecting a slight decrease in price. Despite this, Bitcoin’s trading volume has surged by 48%, reaching $23 billion, with a market cap of $1.31 trillion.
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