Hey, fellow cryptocurrency traders, today is April 2nd, and the reciprocal tariff policy will be officially announced tomorrow! Market sentiment has been like a roller coaster these days, with the ups and downs of US stocks and Bitcoin (BTC) full of uncertainty. However, for short-term traders like us, uncertainty is opportunity! Today I will talk to you about how to use crypto options to design a short-term trading strategy at this critical juncture, and try to make a fortune in this wave of volatility.
Recent Trend Review: US Stocks Rebounded from Low Open, Bitcoin Mainly Fluctuated
Let's take a look at the recent market performance. For the US stock market, it opened low before the market opened in late March, but it often rebounded after the market opened. The overall rhythm was a low-level fluctuation. What about Bitcoin? BTC has been fluctuating between 83,000 and 87,000 US dollars recently. It fell to 83,000 yesterday and rebounded to around 85,000 at noon today. Obviously, the market is waiting for the shoe to drop - once the specific details of the reciprocal tariff policy are announced, it is estimated that it will trigger a big market.
Logically, the trend of US stocks and BTC is highly correlated, because tariff policies will directly affect inflation expectations and the trend of the US dollar. If tariffs are higher than expected, inflation pressure will increase, the US dollar may strengthen, and US stocks and BTC will most likely be under downward pressure; conversely, if tariffs are lower than expected, the market may feel that "bad news is over" and usher in a rebound. This is our entry point for short-term trading!
Core of the strategy: two-way layout of options
Since the market direction is still unclear, let's not bet on unilateral rises and falls. My strategy is to use options to make a "two-way layout", which can not only make money when the market rises, but also keep profits when it falls. Specifically, I plan to use a combination of BTC's call options (Call) and put options (Put) to create a "straddle option strategy" (Straddle). The core of this strategy is: no matter which way the market goes, as long as the volatility is large enough, we can make money.
Steps:
Select expiration time and strike price
Considering that the tariff policy will be announced tomorrow, the market reaction may be concentrated in the next two or three days, so I chose the option that expires on April 4, which is short in time and has large fluctuations, which is just suitable for short-term trading. The strike price is set at 85,000, because BTC is currently fluctuating around this level, and the upper and lower spaces are relatively symmetrical.
Buying call and put options
Buy a BTC Call with an expiration date of April 4 and an exercise price of 85,000. Assume the option premium is $1,500.
If you buy another Put with the same expiration date and exercise price of $85,000, the option premium will also be around $1,500 (the specific price depends on the real-time volatility).
The total cost is $3,000, and this is our biggest risk.
Profit Logic
If BTC rises sharply, for example, to 95,000, you can earn 10,000 from calling and lose everything from putting, with a net profit of 7,000 US dollars.
If BTC drops sharply to $75,000, you can earn $10,000 from Put and lose everything from Call, which is still a net profit of $7,000.
As long as the fluctuation exceeds US$3,000 (cost), we will make a profit. The greater the fluctuation, the more money we will make!
Risk control: Don’t be greedy, stop profit and stop loss in time
Although this strategy can make money in both directions, it also has pitfalls. The biggest risk is that the market volatility is not big enough. For example, if BTC is hovering between 84,000 and 86,000, the two options may be thrown away in vain. Therefore, it is critical to set a stop-profit and stop-loss. My plan is: run when I make $5,000, and close my position when I lose $2,000. After all, short-term trading is about fast in and out, don't fight the market.
In addition, it is also important to keep an eye on real-time news and sentiment on X. If the tariff policy announced tomorrow triggers heated discussions, market sentiment becomes extreme, and volatility may exceed expectations, then it will be more suitable for our strategy.
Why choose options instead of directly speculating on BTC?
Some friends may ask: Why not just go long or short BTC spot? The reason is simple, options have high leverage and controllable risks. Spot trading requires guessing the direction, and if you guess wrong, you will be dumbfounded; options only need to fluctuate in place, and the direction does not matter. Moreover, the cost of $3,000 is much lower than the full position of spot trading, which is suitable for small-capital players to take a gamble.
Final reminder: Keep a steady mind and don’t go all in
This wave of market uncertainty is too strong. After the policy is implemented, the market may soar, plummet, or even go sideways. Therefore, don't throw all your assets into it, save some bullets to deal with unexpected events. I plan to use 1/5 of my position to play this strategy. If I make money, I will treat it as pocket money, and if I lose money, it won't hurt me much.
What do you think of this strategy? If you have any ideas, please leave a message and let’s discuss it together! I wish you all smooth trading and a profitable account!
