Advanced Crypto Options Strategies for Nifty Traders

Source | Crypto options strategies

As a Nifty trader, you’re always looking for new ways to boost your profits and diversify your investments. One exciting opportunity you should consider is crypto options trading. Using advanced crypto strategies can help you tap into the profitable cryptocurrency market.

In this blog, we’ll explore various crypto options strategies, especially for Nifty traders, and explain why Delta India exchange is the ideal platform for your trading needs. Let’s get started!

Understanding Crypto Options Strategies

Source | Advanced crypto trading strategies

Crypto options strategies are techniques used to hedge risks or speculate on the future prices of cryptocurrencies. You can choose crypto options trading strategies depending on your trading objectives and risk tolerance.

Basic Crypto Options Strategies

Following are the four basic crypto options strategies:

Long Call: This involves buying a call option, which gives you the right to buy a cryptocurrency at a specific price (strike price) before a certain date (expiration date). You use this strategy when you believe the price of the cryptocurrency will rise.

Long Put: The Long Put strategy involves buying a put option, which gives you the right to sell a cryptocurrency at a specific price before the expiration date. You use this strategy when you think the price of the cryptocurrency will fall.

Covered Call: In this, you hold a cryptocurrency and sell call options on that same asset. It allows you to earn premiums (fees) from selling the call options while still owning the cryptocurrency.

Protective Put: This crypto options trading strategy involves holding a cryptocurrency and buying put options on it. This acts like an insurance policy to protect against a drop in the cryptocurrency’s price.

Advanced Crypto Trading Strategies

Here are the advanced crypto options trading strategies for Nifty traders:

1. Straddles

Source | Straddle options strategy

A straddle is a strategy where you buy both a call option and a put option for the same cryptocurrency with the same strike price and expiration date. You use this crypto options trading strategy when you expect a big price move but aren’t sure if the price will go up or down.

Example: Imagine Bitcoin is currently priced at ₹20,00,000. You buy a call option (betting the price will rise) and a put option (expecting the price will go down), both with a strike price of ₹20,00,000 and an expiration date one month away.

If Bitcoin’s price rises to ₹25,00,000, the call option makes a profit, and the put option loses, but the overall gain is positive.
If Bitcoin’s price falls to ₹15,00,000, the put option makes a profit, and the call option loses, but the overall gain is positive.
If Bitcoin’s price stays around ₹20,00,000, both options may expire worthless, and you lose the premiums paid.

2. Strangles

Source | Strangle options strategy

A strangle is similar to a straddle with different strike prices for the call and put options. This crypto options trading strategy is also used when you expect a big price move, but it can be cheaper than a straddle because the options are bought at different prices.

Example: Suppose Bitcoin is currently priced at ₹20,00,000. You purchase a call option with a strike price of ₹21,00,000 and a put option with a strike price of ₹19,00,000, both expiring in one month.

If Bitcoin’s price rises to ₹25,00,000, the call option makes a profit, and the put option loses, but the overall gain is positive.
If Bitcoin’s price falls to ₹15,00,000, the put option makes a profit, and the call option loses, but the overall gain is positive.
If Bitcoin’s price stays between ₹19,00,000 and ₹21,00,000, both options may expire worthless, and you lose the premiums paid.

3. Iron Condors

Source | Iron Condor options strategy

An Iron Condor is a strategy used in options trading to profit from low volatility. It involves using four different options contracts to create a range of prices within which you expect the asset to stay.

How It Works:

Buy a lower strike price put option.
Sell a higher strike price put option.
Sell a lower strike price call option.
Buy a higher strike price call option.

These options are all for the same asset and have the same expiration date.

Example with Ethereum:

Buy Put at ₹1,80,000
Sell Put at ₹1,90,000
Sell Call at ₹2,10,000
Buy Call at ₹2,20,000

Goal:

If Ethereum’s price stays between ₹1,90,000 and ₹2,10,000, you profit from the premiums of the options you sold, as they expire worthless.

Why Use It?

Limited risk as losses are capped.
Ideal when you expect minimal price movement.

4. Butterfly Spreads

Source | Butterfly spread options strategy

A Butterfly Spread in crypto options trading profits from minimal price movements by using three strike prices and four options contracts.

How It Works:

Buy one call option at a lower strike price.
Sell two call options at a middle strike price.
Buy one call option at a higher strike price.

Example:

If you expect Litecoin (LTC) to stay around ₹12,000:

Buy one call at ₹10,000.
Sell two calls at ₹12,000.
Buy one call at ₹14,000.

Profit Scenario:

If LTC is ₹12,000 at expiration, you maximize profits since:

The options at ₹10,000 and ₹14,000 balance out.
The ₹12,000 options expire worthless, letting you keep the premiums.

Loss Scenario:

If LTC moves far from ₹12,000, losses are minimized:

Options at ₹10,000 and ₹14,000 offset each other.
Premiums from the sold ₹12,000 options cushion the impact.

Why Use It?

Butterfly Spreads are ideal when you expect minimal price changes, limiting losses while offering good profit potential if the price stays near the middle strike price.

5. Iron Butterfly

Source | Iron Butterfly Options Strategy

The Iron Butterfly is a crypto options trading strategy in which you profit when the price of a cryptocurrency stays around a specific level. This strategy involves four options contracts: two calls and two puts. All four with the same expiration date but different strike prices.

Here’s how it works in simple terms:

Buy a lower strike price put option
Sell a middle strike price put option
Sell a middle strike price call option
Buy a higher strike price call option

Example:

Let’s say you want to use the iron butterfly strategy on Bitcoin (BTC), and you expect its price to hover around ₹30,000 by the option’s expiration date.

Buy a put option with a ₹25,000 strike price.
Sell a put option with a ₹30,000 strike price.
Sell a call option with a ₹30,000 strike price.
Buy a call option with a ₹35,000 strike price.

Profit and Loss:

Maximum Profit: The highest profit occurs when BTC is exactly at ₹30,000 at expiration. This is because the options you sold expire worthless, and you keep the premiums.
Maximum Loss: The highest loss happens if BTC moves significantly away from ₹30,000, but your losses are limited because you own the higher call and lower put options.

Why Nifty Traders Should Consider Crypto Options Strategies

As a Nifty trader, you already have a deep understanding of market dynamics. Crypto options strategies can complement your existing skills by providing several benefits:

Diversification: Spreading your investments across different assets reduces risk.
Hedging: Protect your portfolio against adverse price movements.
Leverage: Options provide a way to control large positions with relatively small capital.

Delta India Exchange: The Best Platform for Crypto Options Trading

Delta India offers a platform for executing your crypto options strategies. Here’s why you should consider trading on Delta:

User-Friendly Interface: Easy navigation and execution of trades.
Low Fees: Competitive pricing to maximize your profits.
Advanced Tools: Access to a variety of trading tools and analytics.
Security: State-of-the-art security measures to protect your assets.

Bottomline

By incorporating these advanced crypto options strategies into your trading routine, you can improve your trading performance and take full advantage of the opportunities in the cryptocurrency market. Start trading on Delta India today and experience the benefits firsthand.

FAQs

What is a crypto options trading strategy?

A crypto options trading strategy involves buying and selling options to hedge against price movements or speculate on future prices.

Why should Nifty traders consider crypto options strategies?

Nifty traders can benefit from diversification, hedging, and leveraging opportunities offered by crypto options strategies.

How does Delta India exchange benefit crypto options traders?

Delta India provides a user-friendly interface, low fees, advanced trading tools, and top-notch security for executing crypto options strategies.

What are some advanced crypto trading strategies?

Advanced crypto trading strategies include straddles, strangles, iron condors, butterfly spreads, and calendar spreads.

Can I start crypto options trading with a small investment?

Yes, options allow you to control large positions with relatively small capital, making it accessible for traders with various investment sizes.