Options Sir Breaks Down Hot Topics | Bitcoin's Rally Lifts Crypto Stocks: How to Spot Opportunities Amid Price Volatility?

After months of silence, $Bitcoin (BTC.CC)$ the market ushered in a bullish rally. Bitcoin began its ascent during the week of August 17, closing up 21.99% for the week and breaking through the $80,000 mark on August 25. This also drove up crypto-related stocks; in August, $Coinbase (COIN.US)$ rose 28.62%, $Circle (CRCL.US)$ gained 52.61%, $Strategy (MSTR.US)$ and climbed 42.52%.

The short-term surge in Bitcoin prices was driven by a one-off short squeeze.In the preceding months, Bitcoin oscillated around the $60,000 level, leading to an accumulation of significant leveraged short positions in the derivatives market. Once the price broke above key levels, a large volume of short positions were forcibly liquidated via buy orders, further fueling the price increase.

However, what truly determines the sustainability of this trend is whether new capital and fundamental support will follow.Positive signals have emerged on both fronts: Firstly, data compiled by Woofun AI shows that U.S. spot Bitcoin ETFs recorded net inflows of $420 million over the past five trading days, effectively hedging against the capital outflow pressure seen in early Q3.

Secondly, the Trump administration is pushing for crypto regulatory frameworks such as CLARITY. If these policy expectations progress to formal congressional approval, it could reduce the industry's regulatory risk discount and provide more durable fundamental support.

Options Market: Short-term bets on upside

In addition to using $GraniteShares 2x Long COIN Daily ETF (CONL.US)$ 、 $T-Rex 2X Long MSTR Daily Target ETF (MSTU.US)$ leveraged ETFs and other instruments to trade volatility, options are also an effective leveraged tool for managing risk.Let's look at Coinbase as an example to examine the expectation signals revealed by the options market.On August 31, market reports indicated that Deribit's Bitcoin options exchange had merged into Coinbase, with reserve assets custodied at Coinbase in preparation for the September 9 merger. A successful merger would bring new derivatives liquidity business to Coinbase, leading to a 5.31% rise in its stock price that day.

Options signals showed that Coinbase's put/call ratio was 0.41 on that day, indicating a short-term bullish trend; the Implied Volatility (IV) percentile stood at 30%, which is relatively low historically.

Gamma exposure data reveals that short-term option market makers' call walls and put walls are at $195 and $185, respectively, representing two levels of significant market pressure. The zero-gamma level is at $165.77; if the stock price falls below this level, there is a risk of market makers unwinding positions, which could accelerate the decline.

1. If you are strongly bullish and believe the stock price will continue its upward trend

SureBuy one call option.The logic behind this strategy is to leverage the high leverage of options to achieve significant gains with a small capital outlay. The entry cost is lower than buying the underlying stock directly. It allows you to capture part of the upside when the stock rises, while limiting risk (maximum loss is limited to the entry cost). However, option buyers face time decay; even if the stock price does not fall, the option's value may decline due to erosion of time value. Therefore,this strategy is suitable for scenarios where you expect a sharp surge in the stock price in the short term.

A more conservative approach is to sell a call option at a higher strike price to hedge against the long call position, forming aBull Call Spread.The time decay of the short call option generates income, which offsets part of the loss caused by the time decay of the long call option.This is suitable for scenarios where you expect a moderate rise in the stock price.

(The design images displayed on the screen are for demonstration purposes only and do not constitute any investment advice or guarantee; market conditions change frequently, and the option prices shown do not reflect actual trading data.)

2. If you are uncertain about the direction but believe that high volatility with significant ups and downs will persist,

you can useBuy a straddle or a strangle. This strategy involves buying one call option and one put option separately, so it does not profit from directional moves in the stock price. When stock price volatility intensifies, implied volatility (IV) typically rises, causing the values of both the call and put to increase simultaneously, resulting in a profit for the strategy. Therefore,this strategy is suitable for investors who are uncertain about the direction of trading but expect an increase in stock price volatility.

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