Investors can use options collar strategy to manage Bitcoin's volatility and potential growth.

From Yahoo Finance: 2025-06-20 10:28:00

Bitcoin is becoming increasingly popular, with investors buying coins, investing in Bitcoin-holding companies, and trading ETFs. The leading cryptocurrency is volatile, but its widespread adoption is fascinating. Blackrock’s iShares ETF unit’s Bitcoin ETF Trust (IBIT) has over $70 billion in assets under management and trades nearly $3 billion a day.

Investors looking to invest in Bitcoin may consider using options to manage risk and returns. A collar strategy involves buying an ETF like IBIT and using option contracts to set a price range for selling. This strategy allows investors to define their worst-case scenario upfront and potentially benefit from Bitcoin’s growth while mitigating volatility.

A collar strategy for Bitcoin ETF IBIT involves buying puts at $60 and selling calls at $75. This creates a range of outcomes where the investor receives $3.90 for selling the call and pays $7.70 for the put. The total cost is about $4 per share, providing a potential 3:1 ratio of upside to downside with nearly 20% upside in 6 months.

The collar strategy for Bitcoin ETF IBIT offers a tradeoff between potential upside and downside, allowing investors to manage volatility and emotions while benefiting from Bitcoin’s growth. This strategy can be adapted to individual risk preferences and market conditions, providing a structured approach to investing in high-flying assets like Bitcoin.



Read more at Yahoo Finance: Take the Bite Out of Bitcoin’s Volatility Using an Options Collar