Portfolio Design with TheTape

Portfolio Design with TheTape

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Portfolio Design with TheTape
Portfolio Design with TheTape
Gulls for Bitcoin Bulls

Gulls for Bitcoin Bulls

Fifty Ways to Trade an Option

Mark Phillips's avatar
Mark Phillips
Dec 11, 2024
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Portfolio Design with TheTape
Portfolio Design with TheTape
Gulls for Bitcoin Bulls
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A metaphorical depiction of trading and volatility using a seagull flying over a dynamic ocean of cryptocurrency tokens. The sea is both stormy, with dramatic waves and dark clouds, and full of vibrant opportunities, with glowing Bitcoin tokens floating like treasures on the water. The seagull symbolizes a 'gull hedged equity strategy,' soaring confidently amidst the turbulence. The scene is high quality, professional, with a tone of insight and trading opportunities, blending realism with a touch of abstraction to convey the complexities of the market.

It was a big deal that Bitcoin hit $100k. So much so that it happened on 7 more hourly candles in the following three days.

Nowhere are psychological levels more important than in an asset whose value is highly dependent on collective belief. It doesn’t matter whether it’s a store of value or means of exchange, one Bitcoin is worth one hundred thousand US dollars.

Crypto has gotten more serious as an asset class, entering into official financialization with a spot based ETF that now has listed options. Yet it also simultaneously maintains the complete absurdity and self immolation with fraudulent meme coin rug pulls and off color wagers.

Whether you absolutely want it in your portfolio or absolutely don’t, you’re right. Everybody needs a little (or lotta) bit of SPY in their allocation, but digital assets are completely up to you.

At Harvested Financial, the way I allocate to this space is through the “Digital Ten” portfolio, which holds a market cap weighted portfolio of the ten largest coins that are eligible for listing in the United States. Indices are usually fairly diversified, but given the nature of this space, roughly 75% of that allocation is Bitcoin and another 18% is Ethereum.

More on the Digital Ten

I view these holdings sort of like a long call. You don’t want to spend too much premium, because there’s the chance it all goes away. (Not because of expiration; but regulations, operations, and all the quirks of cryptographic bearer assets). Yet it has the potential to double or triple, as we’ve seen many coins do this year.

When the asset itself is like an option, it’s the perfect opportunity to use options to help manage the convexity. Unfortunately for Americans, trading options on actual spot crypto isn’t available, but with the ETF options on products like IBIT, you can get pretty close.

Today in Fifty Ways to Trade an Option, we'll look at how to time and set up overlay strategies for right tailed products.

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