Investment and Options Strategist: Koen Hoorelbeke
Derivative products like options on the iShares Bitcoin Trust ETF (IBIT) offer a regulated way to gain exposure to Bitcoin's price movements. This article explores strategies for both bullish and bearish views on IBIT, providing flexible approaches to navigate Bitcoin's volatility.
Introduction
The iShares Bitcoin Trust ETF (IBIT) serves as a prominent regulated vehicle for Bitcoin exposure. However, MiFID regulations often restrict direct IBIT trading for retail investors, particularly in the eurozone.
Options on IBIT provide an indirect solution, allowing investors to:
- Use IBIT as a proxy for Bitcoin's price
- Implement trading strategies without unregulated crypto exchanges
- Access Bitcoin exposure within regulated markets
With Bitcoin price predictions ranging from $45,000 to $180,000, options offer powerful tools to express market views while managing risk.
Why Use IBIT Options?
- Regulated market access: Trade Bitcoin exposure without crypto accounts
- Strategic flexibility: Leverage, protection, and synthetic exposure
- Defined risk: Scenario-test extreme price predictions safely
Core Strategies
1. Buying Calls for Bullish Exposure
Trade Setup:
- Option Type: Call
- Strike: $50
- Premium: $17.99/share ($1,798.75/contract)
- Expiration: January 2026
Key Metrics:
- Max Loss: Premium paid
- Max Gain: Unlimited upside
- Break-Even: $67.99 (Bitcoin ~$122,382)
Scenario Analysis:
| Bitcoin Price | IBIT Price | Profit/Loss | ROI |
|---|---|---|---|
| $180,000 | $100 | +$3,201.25 | 178% |
| Current | $55.27 | -$1,272 | -71% |
| $90,000 | ≤$50 | -$1,798.75 | -100% |
Best For: Investors confident in Bitcoin's long-term growth
2. Buying Puts for Bearish Exposure
Trade Setup:
- Option Type: Put
- Strike: $70
- Premium: $22.81/share ($2,281.25/contract)
- Expiration: January 2026
Key Metrics:
- Max Loss: Premium paid
- Max Gain: $4,718.75 (if IBIT→$0)
- Break-Even: $47.19 (Bitcoin ~$84,942)
Scenario Analysis:
| Bitcoin Price | IBIT Price | Profit/Loss | ROI |
|---|---|---|---|
| $45,000 | $25 | +$2,218.75 | 97% |
| Current | $55.33 | -$814 | -36% |
| $180,000 | ≥$70 | -$2,281.25 | -100% |
Best For: Bearish investors or portfolio hedging
Risk Management Considerations
- Far-dated expirations (Jan 2026) reduce time decay impact
- Highlighted strikes ($50/$70) offer liquidity advantages
- Premium costs represent maximum risk
- Implied volatility (~69%) affects pricing
FAQ Section
Q: Why trade IBIT options instead of Bitcoin directly?
A: IBIT options provide regulated exposure without crypto exchange accounts, with defined risk parameters.
Q: How do I select the right strike price?
A: Consider:
- Current IBIT price
- Your Bitcoin price target
- Open interest for liquidity
- Premium affordability
Q: When should I use calls vs. puts?
A: Calls for bullish views, puts for bearish outlooks or portfolio protection.
Q: What's the main risk with these strategies?
A: The entire premium paid can be lost if the trade doesn't move as anticipated.
Q: How does Bitcoin's volatility affect IBIT options?
A: Higher volatility increases option premiums but also profit potential.
Q: Can I use these strategies for short-term trading?
A: While possible, these examples focus on long-term positions to minimize time decay.
Conclusion
IBIT options offer versatile strategies for Bitcoin exposure:
- Long calls provide leveraged upside
- Long puts offer downside protection
- Both strategies cap maximum risk at premium paid
👉 Learn more about advanced options strategies
👉 Explore regulated crypto investment vehicles
Remember: Options trading involves risk. These examples are for educational purposes only—verify current market conditions before trading.