Key Takeaways:
- Options offer strategic flexibility: earn, hedge, or speculate
- Each strategy has defined use-cases and risk profiles
- Tools like Pi42 make placing these trades seamless
You’ve heard the buzz around crypto options trading strategies. But how do you actually use them? Whether you’re bullish, bearish, or protecting gains, options trading for beginners starts with mastering the basics. These strategies offer flexibility, defined risk, and creative ways to trade Bitcoin, Ethereum, and other assets.
This guide will break down four foundational strategies: long call option strategy, long put option strategy, protective put strategy, and covered call strategy show you how they work in crypto markets.
1. Long Call
What Is a Long Call?
It’s a strategy that gives you the right to buy an asset at a set strike price before expiry. You profit if the market price goes above the strike plus the premium paid.
When to Use
- Bullish on BTC/ETH/SOL
- Want exposure with limited downside
- Expect sharp price moves
Example
BTC at $60,000
Buy a call option @ $62,000 strike for $400 premium
If BTC goes to $66,000, your intrinsic value = $4,000
Profit = $4,000 – $400 = $3,600
Benefits
- Low upfront capital
- No liquidation risk
- Defined maximum loss (premium paid)
👉 This makes the long call option strategy in crypto a go-to choice for bullish traders.
2. Long Put
What Is a Long Put?
It gives you the right to sell the asset at a predetermined strike. You profit if the market falls below the strike minus the premium.
When to Use
- Expecting a drop in prices
- Hedging a long portfolio
- Speculating on downside moves
Example
ETH at $3,000
Buy a put option @ $2,800 strike for $70 premium
ETH drops to $2,500
Intrinsic value = $300; Profit = $300 – $70 = $230
Benefits
- Protects long holdings
- Low cost way to speculate on crashes
- No margin or short-selling required
👉 The long put option strategy in crypto is popular for hedging and downside protection.
Read More: What are Call and Put Options in Crypto
3. Protective Put
What Is a Protective Put?
It’s when you own the crypto asset and buy a put option as insurance. It’s like paying for downside protection.
When to Use
- You have unrealized gains
- Volatility expected (e.g., CPI data, Fed meeting)
- Long-term bullish, short-term cautious
Example
You hold 1 BTC bought at $55,000
Buy a $52,000 strike put for $300
BTC drops to $48,000
Your put value = $4,000, offsetting spot losses
Benefits
- Lock in minimum exit price
- Stay invested while managing risk
- Works well for long-term HODLers
👉 Many investors use the protective put strategy in crypto as portfolio insurance.
4. Covered Call
What Is a Covered Call?
It’s when you hold the underlying asset and sell a call option against it. You earn premium income but cap your upside.
When to Use
- Neutral to mildly bullish outlook
- Willing to sell at a target price
- Looking for passive income
Example
You own 1 BTC at $60,000
Sell a call @ $65,000 for $500
BTC stays below $65,000 → You keep the premium
BTC goes to $67,000 → You sell at $65K, still keeping $500 premium
Benefits
- Extra yield on idle holdings
- Reduces cost basis
- Works in choppy or range-bound markets
👉 A covered call strategy in crypto is ideal for HODLers wanting yield without taking extra risk.
Choosing the Right Strategy for Crypto Options Trading
| Market View | Best Strategy |
|---|---|
| Strongly Bullish | Long Call |
| Strongly Bearish | Long Put |
| Cautious Bullish | Covered Call |
| Cautious Bearish | Protective Put |
Tips:
- Always calculate breakeven (Strike +/- Premium)
- Use limit orders for better execution
- Check liquidity (Bid/Ask, OI) before placing trade
Conclusion
These four crypto options trading strategies are your toolkit for navigating markets, whether you’re aiming for gains or protecting them. With practice and proper risk management, you’ll turn these into powerful weapons in your trading arsenal.
👉 Ready to apply these options trading strategies in crypto? Sign up on Pi42 today and trade smart with confidence.
Keep Learning:
Volatility Trading: Trading With Implied Volatility Options in Crypto
When to Trade Options in Crypto and Why They’re Useful
What is Options Expiry Dates in Crypto: Explained with Examples