Getting_Started_with_Bitcoin_Options_for_Beginners

okxsupport (29)in #btcusdt • 2 months ago

How Beginners Can Get Started with Bitcoin (BTC) Options

For many newcomers, the first encounter with the term options often triggers thoughts like:
“That seems complex,” or “Isn’t this just for expert traders?”
In practice, once you grasp the fundamental principles, it becomes a straightforward tool.

Options are essentially derivative instruments.
Their uniqueness lies in allowing you to pre-design your profit and loss curve.
Let me outline the key benefits of options using a few essential terms.

Flexibility

The first term is flexibility.
Spot and futures are both linear instruments: you either take a long or short position.
But options are non-linear. They enable not just directional trading but also effective risk management.

At their core, options involve trading rights and obligations, while incorporating time as a factor.

For instance, if I desire the right to purchase BTC at $115,000 in one month, that right has a price—this is a call option.
Conversely, the right to sell BTC at a specific price is a put option.

This creates four potential roles (buyers and sellers for both calls and puts), enabling highly adaptable strategies.

For example: holding 1 BTC while buying a put equates to purchasing insurance for your asset.

Asymmetry

The second characteristic is asymmetry.
Spot and 1x futures are linear: a 10% price increase yields a 10% return.

But options provide floating leverage.
During one Ethereum surge, I observed clients achieve 30x returns (equivalent to 3000%).

Buying an out-of-the-money option resembles acquiring a lottery ticket: the cost is minimal,
yet if the market experiences a significant move and hits your strike price,
the payout could be 10x, 20x, or higher.

Controlled Risk

The third advantage is risk control.
High-leverage futures can disrupt sleep—you might awaken to find your entire position liquidated.

As an option buyer, the maximum loss is confined to the premium paid.
It’s akin to a down payment: losses are capped.

As a seller, by avoiding excessive naked selling and hedging with spot positions,
options function as a hedging tool, generating consistent cash flow.

P&L Plasticity

The fourth, and perhaps most appealing feature, is profit-and-loss plasticity.

Linear products demand precise predictions about market direction.
But markets fluctuate with uncertainty—so how can we profit from this?

Option traders act as the market’s “slick operators.”
In the options realm, “roughly correct” can yield profits.

You don’t need exact predictions.
If you can forecast a broad range or trend—
such as “the price will stay within these bounds” or “it won’t reach that peak”—
you can construct option strategies to profit.

Summary of Key Traits

To summarize, the four core features of options are:

Flexibility
Asymmetry
Controlled Risk
P&L Plasticity

My Experience in 2024

In 2024, my primary focus was Bitcoin (BTC).
With altcoins, consistently outperforming BTC proves very challenging.

By concentrating on BTC and applying diverse methods,
I achieved 4x returns denominated in BTC.

Here are the three key strategies I employed:

Large-scale spot swing trades, yielding about 60% annualized returns.
Futures grid trading during sideways markets, generating around 15% monthly returns.
Options strategies across market phases:
- Selling options to earn premiums in ranging markets
- Using combinations to hedge against uncertainty
- Profiting in both bullish and bearish conditions

Combining these three approaches significantly enhanced my BTC-denominated gains.

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