I don’t add things often, but I always discuss it in depth when I do, so now that I had some time this afternoon to overlook the newly opened option chain on IBIT, I took a long dated position and wanted to discuss how I’m going to use leverage and short call options to amplify a long bitcoin trade.
Love the thesis, appreciate the in-depth explanation (as always), and I can confidently say I speak on behalf of all those who get these that you never owe any "sorry"...what you offer all of us goes above and beyond what you have to offer - and what anyone else would share... so, thank you very much! Have a wonderful evening and good luck on all the trades (even though you don't need any haha
Great note today on $IBIT - really like your thought process on the trade, James! Wish I had the money to follow your trade idea here. Here’s hoping your next trade is a profitable one.
Thanks James, question if I may (not for debate but for learning): Why did you choose in this case not to do a risk-reversal? (Yes, as a Bulltard adherent I have to ask :) ).
In this case, sell 2 puts lower for 1 call spread - give yourself some wiggle room for volatility plus an uncapped upside if there's an explosive short-term move, in a pretty low-risk trade, worst case you have to take a bunch of IBIT for much lower?
Because I don’t have the available margin to sell 500 puts which is $2.5m worth. I’m taking a very concentrated position and it’s in very large size. It’s hard for me to do that without closing up a lot of my Amazon and Apple
Love this trade James. I'm not going to follow you on this particular one because I already have a too large and growing percentage of my net worth in actual bitcoin (first bought in 2017) -- it's just not prudent for me to go this far in.
That said, I love reading your thinking here. Since that WYNN trade, I've been doing a bunch of calendars/diagonals and I love how the work. The fact that you make income and can make most if not all of your cost back is insane. I don't see why more people don't use that strategy.
What I like about seeing your thinking though is that what you're selling. You're selling one month out 30% above the current price. That makes more sense than what I was doing, which was selling the 20 delta either one month or one week out. The problem with my strategy is 20 delta is still 1 in 5, so when something explodes you have to take the win early. Happened to me with AFRM this week. Nice winner, but could have been a monster if the short side was a higher strike. I can see that at 30% above the current price you're not going to make back your entire cost basis, but that isn't necessarily the goal. Since my mind was thinking that was the goal, I was a bit too aggressive on the short side. So I like seeing what you're doing. Thanks as always.
Ya man it’s not often a name has options worth selling 30% otm a month out but these Bitcoin names do, gosh look at at mstr. I do think this ultimately resolves higher.
With bitcoin, since there's only 21 million, it is illiquid. Right now every one wants to get some. When more holders want to sell it, it will crash the price. Bitcoin is the madness of crowds. One day people will tell themselves there's only 21 million, how come no one want's mine?
In the meantime, I don't argue with the tape, so being long is the way to go. Thanks for sharing your strategy.
I would disagree in that most aren’t selling, the price has been straight up for a very long time and like any asset in fixed supply whether it be classic cars,art,you name it, people want it vs fiat. Bitcoin will be materially higher in a decade imo
Love the thesis, appreciate the in-depth explanation (as always), and I can confidently say I speak on behalf of all those who get these that you never owe any "sorry"...what you offer all of us goes above and beyond what you have to offer - and what anyone else would share... so, thank you very much! Have a wonderful evening and good luck on all the trades (even though you don't need any haha
Great note today on $IBIT - really like your thought process on the trade, James! Wish I had the money to follow your trade idea here. Here’s hoping your next trade is a profitable one.
Thanks Aaron have a good one
I have followed 3 of your big trades. All fantastic.
Thanks brother
Might follow you into this one. Love the idea.
Thanks James, question if I may (not for debate but for learning): Why did you choose in this case not to do a risk-reversal? (Yes, as a Bulltard adherent I have to ask :) ).
In this case, sell 2 puts lower for 1 call spread - give yourself some wiggle room for volatility plus an uncapped upside if there's an explosive short-term move, in a pretty low-risk trade, worst case you have to take a bunch of IBIT for much lower?
Because I don’t have the available margin to sell 500 puts which is $2.5m worth. I’m taking a very concentrated position and it’s in very large size. It’s hard for me to do that without closing up a lot of my Amazon and Apple
Understood! Thank you for sharing.
Love this trade James. I'm not going to follow you on this particular one because I already have a too large and growing percentage of my net worth in actual bitcoin (first bought in 2017) -- it's just not prudent for me to go this far in.
That said, I love reading your thinking here. Since that WYNN trade, I've been doing a bunch of calendars/diagonals and I love how the work. The fact that you make income and can make most if not all of your cost back is insane. I don't see why more people don't use that strategy.
What I like about seeing your thinking though is that what you're selling. You're selling one month out 30% above the current price. That makes more sense than what I was doing, which was selling the 20 delta either one month or one week out. The problem with my strategy is 20 delta is still 1 in 5, so when something explodes you have to take the win early. Happened to me with AFRM this week. Nice winner, but could have been a monster if the short side was a higher strike. I can see that at 30% above the current price you're not going to make back your entire cost basis, but that isn't necessarily the goal. Since my mind was thinking that was the goal, I was a bit too aggressive on the short side. So I like seeing what you're doing. Thanks as always.
Ya man it’s not often a name has options worth selling 30% otm a month out but these Bitcoin names do, gosh look at at mstr. I do think this ultimately resolves higher.
I agree with you and for the sake of my bitcoin holdings, I hope you're right.
With bitcoin, since there's only 21 million, it is illiquid. Right now every one wants to get some. When more holders want to sell it, it will crash the price. Bitcoin is the madness of crowds. One day people will tell themselves there's only 21 million, how come no one want's mine?
In the meantime, I don't argue with the tape, so being long is the way to go. Thanks for sharing your strategy.
I would disagree in that most aren’t selling, the price has been straight up for a very long time and like any asset in fixed supply whether it be classic cars,art,you name it, people want it vs fiat. Bitcoin will be materially higher in a decade imo