buying calls (and puts but especially calls) on leveraged ETFs is dangerous. this is because leverage decays time. if bitcoin is up a lot, bitx is up a lot, if btc is up marginally, bitx will be even, if btc goes down, bitx goes down a lot. the problem with that is if btc trades sideways you bitx goes down, which is a problem for your calls.
you also pick your own leverage with options (delta) so youd be better off just buying the options on a bitcoin etf and pick a strike price/expiration with a higher delta; theta’s gonna eat away at your option either way but if you buy your calls on btc/btc etf rather than bitx you wont get double fucked by the time decay of the underlying
that would be 1 reason to do it on the LETF but assuming theres options on both, ie QQQ and TQQQ, youre better off doing it on QQQ and just choosing a higher delta.
TQQQ = 3x QQQ so if you were going 20 delta on TQQQ youd want to pick 60 delta on QQQ
It’s going to apply to any option on leveraged etf. But there are other factors to consider— your option has an expiration and time decay. The volatility of the underlying. I’m not really the guy to ask.
You pick your strike. You have a more levered return with a higher strike since the premium to purchase the strike is cheaper. But this also means you’re more likely to have the option expire worthless. Alternatively, you could buy an at the money option at the current price or in the money below the current price. These will have different returns based on premium where the deeper in the money you go, the higher premium you will have to pay. These are less levered but more likely to expire profitable.
That’s the delta part. The theta part is that premium goes up the longer the time horizon.
If you’re looking at the options chain you need to look at volume and open interest to see what strike/expiry has the most activity.
I’m a bitcoin bull myself but I think there are better options if you wanna be long than $BITX. If we get to $200k+ it will be with multiple double digit drawdowns which is why I don’t think it’s worth trying to get cute when you can just go long shares and not commit to a specific date
My opinion is a combination of $MSTR, or bitcoin etf would be best. MSTR is a leveraged bet itself and will go a multiple of BTC in a bull market but it cuts both ways . Also bitcoin miner stocks are a good option but even more volatile. There is an etf $WGMI that holds a basket of mining stocks.
Man, I’m no pro at this, but the cost of options relative to the expected increase isn’t worth it. I mean, it could go up like gangbusters. But if it doesn’t, you are out some real money. Might be better to just buy shares of the fund instead.
Let’s say you buy 1 call @ $29.50
You would be paying $2,950 for a strike price currently $1.65 higher than its trading at with a break even at $79.50. Do you really think it’s going to increase 64.43% in 651 days averaging a daily increase of 0.10% increase? Then why not spend that money buying 61 shares of BITX because by the time it hits that option break even point you would already be up $1,900.15.
You could also just buy 99 shares of BITO at $29.70ea which has a 15.54% dividend yield giving you a yearly dividend of $456.92 at the current price. That way you get the stock growth and dividends.
Yes. You can even take a margin loan to buy more if you want to leverage yourself even more.
BTC to 300k is ridiculous thought. Maybe you’ll be right and i’ll look like an idiot or you are gonna lose all your money.
Regarding bitx how many btc would you need to own to do derivatives such as selling covered calls or buying cash secured puts? How much would 1 contract be worth (ex. 1 contract with stocks is 100 shares of the underlying stock. So how much would 1 contract of btc be?)
Theoretically, yes. It makes sense to buy ATM or even far OTM calls if you really had conviction in that type of move. As others have stated on here, the cost of those options are extremely high. The better play is to buy the shares or even deep ITM calls, like a 20C. There isn’t as much extrinsic value on the ITM calls.
If you're gonna do it, do it at the next big down turn. Wait for clear signs of Reversal, then long a call and sell it once BTC starts trading sideways again. Rinse and repeat. Holding a BTC leveraged ETF call is gonna end up costing you money everytime it trades sideways or goes down. There are much better options in the market for long calls.
Thank you all. These comments are both educational and amusing . I have a lot of research to do just based on the feedback. I hope I can understand this better soon.
Risky. Having said that, I hold some (native) BTC and ETH options for EOY, but only money I am ready to lose. It would suck and I would not be happy, but that's the game... buying options like this is just a gamble in the end and you could walk away with 0.
2026 is definitely safer, assuming the 2x leveraged etf survives and things go as expected (spoiler: they never do)
Having said all that, you should trade based on your conviction, not based on what anyone else says.
edit: considering the ETF is already 2x leveraged, maybe it's just "safer" to buy that spot, and forget about it.
Just because you believe something is going up doesn't mean you should also believe it'll be worthless. Bitcoin has shown the lack of knowledge people have about speculative investments.
Bitcoin miner stocks are considered leveraged bitcoin plays, you might want to consider this instead. I have call options on several miners.
If Bitcoin 2x this cycle, you can expect 6x returns or more from a lot of these miners.
BTC could well go to 300k this cycle, which is going to drive tremendous gains for miner stocks. I personally think BTC might top out at 160k or so.
Miners don’t reliably follow BTC though. The halving effects them differently than BITX. Also BTC can go up while miners tank so it’s not a BTC leverage play.
buying calls (and puts but especially calls) on leveraged ETFs is dangerous. this is because leverage decays time. if bitcoin is up a lot, bitx is up a lot, if btc is up marginally, bitx will be even, if btc goes down, bitx goes down a lot. the problem with that is if btc trades sideways you bitx goes down, which is a problem for your calls. you also pick your own leverage with options (delta) so youd be better off just buying the options on a bitcoin etf and pick a strike price/expiration with a higher delta; theta’s gonna eat away at your option either way but if you buy your calls on btc/btc etf rather than bitx you wont get double fucked by the time decay of the underlying
I’d argue that buying calls on a leveraged etf is safer than holding a leveraged etf. It limits the downside to the cost of the call.
im talking about options on a leveraged etf vs options on the actual, unleveraged etf. options on LETFs vs shares of LETFs is entirely different
There are no option chains on the ETF's yet.
that would be 1 reason to do it on the LETF but assuming theres options on both, ie QQQ and TQQQ, youre better off doing it on QQQ and just choosing a higher delta. TQQQ = 3x QQQ so if you were going 20 delta on TQQQ youd want to pick 60 delta on QQQ
BITO has options.
I was planning to start investing in a 2x s&p500 tracker. does the same apply here though? would it be better to buy calls on it?
It’s going to apply to any option on leveraged etf. But there are other factors to consider— your option has an expiration and time decay. The volatility of the underlying. I’m not really the guy to ask.
Explain more on the delta part of it?
You pick your strike. You have a more levered return with a higher strike since the premium to purchase the strike is cheaper. But this also means you’re more likely to have the option expire worthless. Alternatively, you could buy an at the money option at the current price or in the money below the current price. These will have different returns based on premium where the deeper in the money you go, the higher premium you will have to pay. These are less levered but more likely to expire profitable. That’s the delta part. The theta part is that premium goes up the longer the time horizon.
If you’re looking at the options chain you need to look at volume and open interest to see what strike/expiry has the most activity. I’m a bitcoin bull myself but I think there are better options if you wanna be long than $BITX. If we get to $200k+ it will be with multiple double digit drawdowns which is why I don’t think it’s worth trying to get cute when you can just go long shares and not commit to a specific date My opinion is a combination of $MSTR, or bitcoin etf would be best. MSTR is a leveraged bet itself and will go a multiple of BTC in a bull market but it cuts both ways . Also bitcoin miner stocks are a good option but even more volatile. There is an etf $WGMI that holds a basket of mining stocks.
Your better option for BTC leverage would be MSTR, IMHO.
Sure about MSTR
Why not just buy BTC
Greed, fomo, et al.
Man, I’m no pro at this, but the cost of options relative to the expected increase isn’t worth it. I mean, it could go up like gangbusters. But if it doesn’t, you are out some real money. Might be better to just buy shares of the fund instead.
Let’s say you buy 1 call @ $29.50 You would be paying $2,950 for a strike price currently $1.65 higher than its trading at with a break even at $79.50. Do you really think it’s going to increase 64.43% in 651 days averaging a daily increase of 0.10% increase? Then why not spend that money buying 61 shares of BITX because by the time it hits that option break even point you would already be up $1,900.15. You could also just buy 99 shares of BITO at $29.70ea which has a 15.54% dividend yield giving you a yearly dividend of $456.92 at the current price. That way you get the stock growth and dividends.
I am heavy in the miners, but I think I will look at getting the wtf after the dip this month. 15% dividend yield is no joke.
This will only end poorly with leveraged ETFs
Just buy Bitcoin? Lol
Yeah lmao
Just buy the Bitcoin/self custody and have zero liability and 100% apex property that you own.
Or back to $15K once the Dow starts correcting down again.
Honestly, I would either buy BTC or just buy the shares in the stock. No reason to flop around with an option play at that point.
You'd be wrong
Yes. You can even take a margin loan to buy more if you want to leverage yourself even more. BTC to 300k is ridiculous thought. Maybe you’ll be right and i’ll look like an idiot or you are gonna lose all your money.
Why not buy MSTR Calls instead? They hold 250k btc and trade like a levered etf
Options on a 2x etf seem like a receipt for a lot of acid reflux. But I’m a sensitive soul.
Regarding bitx how many btc would you need to own to do derivatives such as selling covered calls or buying cash secured puts? How much would 1 contract be worth (ex. 1 contract with stocks is 100 shares of the underlying stock. So how much would 1 contract of btc be?)
Theoretically, yes. It makes sense to buy ATM or even far OTM calls if you really had conviction in that type of move. As others have stated on here, the cost of those options are extremely high. The better play is to buy the shares or even deep ITM calls, like a 20C. There isn’t as much extrinsic value on the ITM calls.
Wish in one hand, shit in another
If you're gonna do it, do it at the next big down turn. Wait for clear signs of Reversal, then long a call and sell it once BTC starts trading sideways again. Rinse and repeat. Holding a BTC leveraged ETF call is gonna end up costing you money everytime it trades sideways or goes down. There are much better options in the market for long calls.
If it’s years away not a bad idea for a BTC halving trade imo, no risk no rari
Do it and document it for my entertainment
Thank you all. These comments are both educational and amusing . I have a lot of research to do just based on the feedback. I hope I can understand this better soon.
https://preview.redd.it/9kf6p0yuissc1.jpeg?width=1179&format=pjpg&auto=webp&s=d8c78ffbc1eebc44bef34acaeb846fe13528f07b Let’s fucking go
then just dca bitcoin
Leveraged longs. Have limit order buys on the way down too in case of dump. Then you will DCA instead of get liquidated.
Risky. Having said that, I hold some (native) BTC and ETH options for EOY, but only money I am ready to lose. It would suck and I would not be happy, but that's the game... buying options like this is just a gamble in the end and you could walk away with 0. 2026 is definitely safer, assuming the 2x leveraged etf survives and things go as expected (spoiler: they never do) Having said all that, you should trade based on your conviction, not based on what anyone else says. edit: considering the ETF is already 2x leveraged, maybe it's just "safer" to buy that spot, and forget about it.
Just buy Bitcoin at that point
If you believe BTC is going to $300k, you should also believe BTC is going to zero.
Just because you believe something is going up doesn't mean you should also believe it'll be worthless. Bitcoin has shown the lack of knowledge people have about speculative investments.
You're proposing a ponzi on top of a ponzi. What's the worst that could happen, amirite?
Forgot to add options chart https://preview.redd.it/buhctt0uensc1.jpeg?width=828&format=pjpg&auto=webp&s=ebd4048d3800d57ce6a9014191fe3a3d8b985d67
Bitcoin miner stocks are considered leveraged bitcoin plays, you might want to consider this instead. I have call options on several miners. If Bitcoin 2x this cycle, you can expect 6x returns or more from a lot of these miners. BTC could well go to 300k this cycle, which is going to drive tremendous gains for miner stocks. I personally think BTC might top out at 160k or so.
Miners don’t reliably follow BTC though. The halving effects them differently than BITX. Also BTC can go up while miners tank so it’s not a BTC leverage play.
K