Quantitative trading firm TDX Strategies has presented clients with a bullish options strategy on Bitcoin that aims to capture potential upside while keeping the initial cost of the trade low.

In a market note released Wednesday, the Hong Kong-based firm recommended a bullish risk reversal structure to build exposure to a potential bitcoin rally through the March and April options expiries. The approach involves selling a put option and using the premium collected to purchase a call option, effectively financing the bullish position.

By writing a put and receiving the premium, traders can offset the cost of buying a call, allowing them to establish upside exposure with little or no upfront investment. The structure provides a capital-efficient way to position for a potential rise in bitcoin’s price.

The recommendation reflects a broader trend among professional traders toward more complex derivatives strategies. Instead of simply accumulating spot bitcoin or using straightforward leveraged long positions, many market participants are increasingly turning to options to refine their risk profiles and make more efficient use of capital.

A call option gives the buyer the right to purchase an asset at a predetermined strike price before a specified expiration date. If the asset’s market price moves above that strike level, the buyer can profit from the difference. If it does not, the option expires worthless and the buyer loses the premium paid.

A put option, by contrast, provides downside protection by giving the holder the right to sell an asset at a fixed strike price before expiration. If the market price drops below that level, the option gains value; if not, the premium paid is forfeited.

In TDX’s suggested setup, the trader sells an out-of-the-money (OTM) put—meaning the strike price sits below the current market price—and collects the premium. That income is then used to purchase an OTM call with a strike above the current market price, creating a relatively low-cost bullish structure.

“The anticipated confirmation of Mojtaba Khamenei as Supreme Leader introduces an added element of risk of immediate retaliatory escalation, however, we view any headline-driven market jitters as a tactical entry point,” TDX said in its note.

The firm added that it aims to “capitalize on temporary weakness to build upside exposure in the March and April expiries, favoring bullish risk reversals funded by selling OTM puts.”

Despite the attractive cost profile, the strategy carries notable risks. By selling an out-of-the-money put, the trader commits to purchasing bitcoin at the strike price if the market falls below that level. In a sharp downturn, this could result in buying the asset above the prevailing market price.

Meanwhile, the call option purchased to capture upside may expire worthless if bitcoin fails to rally beyond the strike price before expiration.

In essence, the trade exchanges a lower upfront cost for an asymmetric payoff structure—providing exposure to a potential rally while leaving the trader exposed to downside risk if prices fall significantly below the put strike.

Given these risks, the strategy requires careful monitoring and is generally better suited for experienced traders with a solid understanding of options markets rather than investors with limited capital or familiarity with derivatives.