There are three potential outcomes that can arise from using Bybit Discount Buy — Knockout, Profitable Purchase or Less Profitable/Break-Even Purchase.

As the cryptocurrency market begins to show signs of a bullish trend, investors are increasingly on the lookout for innovative strategies to maximize their returns. In this dynamic landscape, Bybit's Discount Buy emerges as a noteworthy tool, especially for those who are optimistic about the long-term potential of digital assets. This article delves into the intricacies of Bybit Discount Buy, a novel offering that enables investors to purchase 

 (ETH) at prices potentially lower than the prevailing market rates at the time of settlement. 

Designed for markets with low volatility and tailored to the needs of long-term investors, this non-principal-protected product presents a unique opportunity in the realm of cryptocurrency investments. In this article, we’ll explain how Bybit Discount Buy works, how to use it strategically, and its potential outcomes and benefits.

Bybit Discount Buy is a product designed to let you potentially purchase BTC or ETH at a lower price than the market value on a future settlement date. 

On the settlement date, you’ll either buy the coin at the “purchase price” or receive your principal plus interest in USDT, depending upon the market price on the settlement date, also known as the Settlement Price. Discount Buy is a non-principal-protected product, meaning you may lose your initial investment if the market moves unfavorably.

Bybit Discount Buy operates based on three crucial parameters: Purchase Price, Knockout Price and Knockout APR. The Purchase Price is the price you'll pay for the coin on the settlement date, while the Knockout Price is the threshold triggering a payoff instead of the coin purchase. Finally, the Knockout APR signifies the 

 (APR) added to your principal in the payoff scenario.

Bybit Discount Buy becomes profitable when the Settlement Price (the coin's market price on a future settlement date) falls between the Knockout Price and the Purchase Price. This scenario enables you to purchase the coin at a below-market rate, potentially leading to profits upon resale. However, if the Settlement Price surpasses the Knockout Price, you'll receive a payoff in USDT, including your principal along with the Knockout APR. However, if the Settlement Price equals or falls below the Purchase Price, you'll buy the coin at the Purchase Price, potentially incurring a loss.

This product is suitable for investors anticipating a decline in market volatility, thereby benefiting those expecting the coin's price to remain within a specific range. It's also beneficial for investors aiming to accumulate more crypto during 

 or low volatility periods. Nevertheless, using Bybit Discount Buy demands adept risk management skills, a high tolerance for risk and a solid grasp of market trends.

How Discount Buy Differs From Traditional Crypto Trading

Unlike traditional crypto trading, in which you buy and sell coins at the market price, Bybit Discount Buy allows you to potentially lock in a lower price for your future purchases or earn a yield. This potential advantage allows you to either buy more coins with the same capital investment, save money on your purchase or collect interest. 

However, there’s also a risk that the market price will drop below the purchase price, in which case you’ll buy the coin at a higher price than the market rate. Therefore, Bybit Discount Buy is more suitable for long-term investors who believe in the future growth of their desired token, and aren’t affected by short-term price fluctuations.

Strategic Timing for Using Bybit Discount Buy

Discount Buy works well for investors who want to target a lower entry price than current market values for a coin. This product particularly thrives in stable market conditions. Understanding how to strategically use it involves considering the following factors.

Market sentiment, which reflects investors' feelings about the crypto market, significantly impacts Bybit Discount Buy's performance. Typically, during times of bearish or stable market sentiment, there's a greater chance of the Settlement Price falling within the Knockout Price and the Purchase Price, which can be advantageous. You can gauge 

 through sources such as news, social media, volatility indices and trading volume.

Price trends reflect the direction and strength of price movements. You can use tools such as trend lines, chart patterns and moving averages to assess them. Bybit Discount Buy is beneficial during a market consolidation phase when prices are expected to remain within a narrow range. 

This scenario allows either purchasing coins at a discount for later sale at the market rate or waiting for an upward breakout. However, using this feature during strong uptrends or downtrends may lead to missed opportunities or potential knockout situations, due to price movements breaking out of the expected range.

Determining whether to use Bybit Discount Buy involves comparing potential losses to potential gains in the contract, and assessing the 

, which depends upon plan parameters such as the Purchase Price, Knockout Price and Knockout APR. Generally, lower Purchase Prices elevate the risk/reward ratio, as they offer more significant discounts but increase the chances of being knocked out. 

Conversely, higher Knockout Prices lower the risk/reward ratio, as they provide a higher APR but reduce the chances of buying coins at a discount. Higher Knockout APRs increase the risk/reward ratio by offering more interest, but also heighten the chances of being knocked out.

When you use Bybit Discount Buy there are three specific potential outcomes, each presenting distinct conditions and strategies for users.

If the Settlement Price surpasses or equals the Knockout Price, users get back their principal plus the APR in USDT. 

Upon receiving USDT as a payoff, users have a couple of options: Reinvest it in buying more coins at a lower price, or put it into another Discount Buy plan with a higher APR or a lower Knockout Price.

Bybit offers several avenues for reinvestment, including 

 enables users to earn interest on their idle tokens by staking them in flexible or fixed-term plans. Choose from various tokens and durations and enjoy APR and other benefits. 

If the Settlement Price falls between the Purchase Price and the Knockout Price, you'll buy the desired coin at the Purchase Price and make a profit. This tactic locks in a lower price for the coin than the market rate at the settlement date.

 is a short-term trading tool tailored for low-volatility markets, allowing you to predict price movements within a specific time frame. Depending upon your forecast, you can deposit and potentially receive returns in USDT or crypto assets. With 21 coin pairs and three deposit periods available, Bybit Dual Asset 

 seeking enhanced returns, irrespective of market direction. It's ideal for those aiming to accumulate different crypto assets, capitalize on swings or make quick trades during both uptrends and downtrends.

 rewards you for providing liquidity to the Bybit Spot market. You can choose a trading pair, deposit funds to the liquidity pool, and earn income from trading fees and 

Buy Scenario 2: Less Profitable or Break-Even Purchase

When the Settlement Price falls below or equals the Purchase Price on Bybit, acquiring the target coin takes place at a rate that either doesn't yield profits or breaks even.

To minimize losses with Bybit Discount Buy:

 is a non-principal-protected product that offers a unique way to earn income from the crypto market. Unlike traditional trading, in which you buy and sell coins at the market price, 

 allows you to choose a base coin and a target coin, and receive a payoff based on whether the settlement price is higher or lower than the current price.

However, there’s also a risk that you may lose your entire investment if the settlement price falls within the preset range, which is determined by the product’s parameters. Therefore, Bybit Double-Win is more suitable for experienced investors who would like to capitalize on significant headline events that have shaken the industry or strategically manage risks associated with market volatility within a set time frame. Bybit Double-Win supports BTC, ETH and LINK as base coins and USDT as the target coin.

 are a type of derivative product that allows you to trade the price movements of various assets without owning them. You can choose to go long or short on a trading pair and 

 your position to amplify your profits or losses. For example, if you 

, you’ll incur 10 times the profit or loss as BTC’s price changes.

Evaluating Bybit Discount Buy for Your Trading Style

Bybit Discount Buy allows you to buy coins at lower prices than the market rates at settlement, based on the coins’ volatility. It’s ideal for traders who believe in the long-term growth of their desired coin and aren’t fazed by short-term price fluctuations. 

However, not all trading styles match this product. Here’s what to consider:

Bybit Discount Buy offers a strategic way to potentially acquire BTC and ETH at discounted rates. Not without its risks, It's best suited for investors looking to ramp up crypto holdings in bear markets at lower volatility levels. These investors feel more confident about long-term growth. Assessing market sentiment, understanding price trends and evaluating risk/reward ratios are critical. 

Each outcome — Knockout, Profitable Purchase or Less Profitable/Break-Even Purchase — provides a distinct feature that results in either a lower predetermined purchase price, offers a yield, breaks even or results in losses. Bybit also provides diverse avenues for reinvestment and portfolio expansion that complement Discount Buy. Make sure you align your opportunities with your trading style while considering volatility, liquidity needs and your time horizon. 

 and strategic use of this product can maximize its advantages for committed, risk-aware investors.

Intermediate

DEC23_R9_Evergreen_Educational_Bybit_Discount_Buy_Your_BTC_and_ETH_Bull_Market_Advantage.png

Bybit Discount Buy: Your BTC and ETH Bull Market Advantage

Bybit Discount Buy is a non-principal protected product that allows you to acquire BTC and ETH at prices lower than the market rate at the settlement date.

 lies not just in its potential for high returns, but also in the continuous innovation that shapes its landscape. A key aspect of this dynamic market is the pursuit of strategies that enable traders to maximize their investments, particularly in stable market conditions. In such scenarios, the ability to purchase digital assets at lower prices becomes a significant advantage. This is where Bybit's Discount Buy feature comes into play, offering a unique solution for investors looking to capitalize on market stability. In this article, we’ll explore Discount Buy’s functionality, benefits and suitability for different investor profiles.

 is a non-principal protected product from Bybit designed for low-volatility markets, allowing clients to acquire 

 and ETH at prices lower than the market rate at the settlement date. This feature is particularly beneficial when BTC/ETH 

Discount Buy operates on a unique mechanism whereby users can purchase a specific asset at a predetermined price on the settlement date, which is below the market rate at the time of order placement. This is particularly advantageous when the Settlement Price falls between the Knockout Price and Purchase Price.

Bybit’s Discount Buy is structured to function optimally in specific market scenarios as follows:

There are several advantages to using Discount Buy. Following are three of its key benefits.

Discount Buy offers the unique advantage of acquiring cryptocurrencies at 

 than the current market rate. This is particularly beneficial in 

 or periods of low volatility, where the chances of the Settlement Price falling within the favorable range (between the Knockout and Purchase Prices) are higher.

The product's structured nature, akin to a 

, provides a cap on the price level in the holder’s favor. However, unlike traditional knockout options, a Discount Buy plan won’t expire worthless, as users have the option to buy the desired coin at a price lower than the market price at the time of order placement.

In the Knockout Scenario, where the Settlement Price exceeds the Knockout Price, users not only get their principal back but also earn an additional APR, enhancing the overall profitability of their investment.

While Discount Buy offers several benefits, it also comes with 

. Below are three key risks associated with this investment product.

Despite the Purchase Price potentially being below the market price at the time of order placement, it might still be higher than the Settlement Price. In such scenarios, the settlement continues at the Purchase Price, which could result in a loss for the trader. This highlights the inherent risk that market volatility and price fluctuations may affect the investment outcome.

The non-principal guaranteed nature of Discount Buy means that invested capital is at risk. If the Settlement Price reaches or exceeds the Knockout Price, the trader receives the initial investment plus the Knockout coupon payment. However, if the market moves unfavorably, the principal amount could be at risk. This makes it crucial for investors to assess their risk tolerance before participating.

Suitability for Specific Investor Profiles

Bybit’s Discount Buy is designed for users who are looking to 

 in bear markets, or when market volatility is low. It requires a nuanced understanding of market trends and the ability to predict the movement of the Settlement Price within the specified range. This makes it more suitable for experienced traders, or for those with a higher risk tolerance.

Now that you're familiar with the essentials of Bybit’s Discount Buy, let's delve into a comprehensive guide on how to begin using it. Before proceeding with Discount Buy, ensure you have an active Bybit account. If you haven't set one up yet, 

: Log in to your Bybit account and hover your cursor over the 

tab on the navigation bar at the top of the page. Then, hover over 

 button of the corresponding plan that you’d like to select.

: Input your investment amount and ensure that you acknowledge all the parameters you’ve chosen. Once acknowledged, click on 

: Please ensure that you’re aware of the following: 

, you’ve successfully subscribed to the plan.

If you’d like to view the details of your Discount Buy orders, simply click on 

 in the successful order notification pop-up window.

Alternatively, you can follow the steps below if the pop-up window has disappeared.

 button on the top right corner of the homepage and click on 

Discount Buy is particularly suitable for:

Whether or not to use Discount Buy depends upon individual trading strategies and market understanding. It's an attractive option for those looking to capitalize on lower prices during stable market conditions. However, it requires a good grasp of market trends and 

. Traders should evaluate their investment goals and risk tolerance before deciding to use this feature.

Bybit’s Discount Buy presents an intriguing opportunity for cryptocurrency traders, offering assets at below-market prices under certain conditions. While it has benefits such as cost savings, it also carries risks associated with market volatility. As with any trading tool, it's essential to use Discount Buy judiciously, in accordance with one's particular trading strategy and risk appetite.

Beginner

NOV23_R24_Evergreen_Educational_Bybit_Discount_Buy_Unlocking_Lower_Prices_in_a_Stable_Market.png

Bybit Discount Buy: Unlocking Lower Prices in a Stable Market

PayPal has collaborated with MoonPay to provide its 426 million U.S. customers access to more than 100 different cryptocurrencies, adding to its original offerings of Bitcoin, Ethereum, and its stablecoin, PYUSD.

The SPX index was up 0.91%, as the market welcomed the dovish remarks from the Federal Reserve. The broader cryptocurrency market was down, with Bitcoin and Ether up by 4.14% and 1.68%, respectively in the past 24 hours.

Today’s outperformer is AR, which jumped 25.1% after HackMD integrates Arweave for permanent blockchain document storage.

Arweave (AR), launched in June 2018, is a decentralized platform for permanent data storage, leveraging its AR cryptocurrency to incentivize users and ensure data permanence. It offers easy web access and is developing moderation tools, with a key partnership with the Internet Archive highlighting its commitment to secure data preservation. 

 integrated with Arweave in March 2023, enabling users to permanently store documents on the blockchain. This feature ensures decentralized, immutable storage for important documents such as white papers. Users can export and import documents between HackMD and Arweave using the ArConnect wallet and browser extension, enhancing data security and permanence. This integration underscores HackMD's commitment to leveraging web3 technologies for secure and efficient document management.

Check Out the Latest Prices, Charts, and Data of 

PayPal has collaborated with MoonPay to provide its 426 million U.S. customers access to more than 100 different 

, adding to its original offerings of Bitcoin, Ethereum, and its stablecoin, PYUSD. This move reflects PayPal's increasing engagement with the cryptocurrency sector, highlighted by the rapid rise in PYUSD's market value and its integration into PayPal’s cross-border payment service, Xoom. This development occurs as U.S. regulators intensify their oversight of cryptocurrencies.

U.S.-based spot Bitcoin ETFs, including BlackRock's iShares Bitcoin Trust, experienced a record single-day outflow of over $563 million. This coincided with a significant drop in Bitcoin's value. Despite the outflows, industry analysts affirm that such fluctuations are normal and the ETFs are functioning smoothly. 

Mode's community has propelled the platform into a leading Layer 2 network, boasting over $500 million in TVL and significant ecosystem growth. In response to this success, Mode will end 

 on May 5th and launch Airdrop 2 with 500 million MODE tokens to further incentivize ecosystem participation. The native $MODE token, essential for governance and ecosystem growth, will launch on May 7th. The first airdrop saw 5.5% of MODE's total supply allocated, with significant vesting terms for top wallet holders to promote long-term holding. Airdrop 2 aims to continue this momentum by rewarding ongoing user and developer engagement.

Daily_Bits_Title_Subtitle_&_Eyebrow_1600x900_(12).png

PayPal Expands Crypto Offerings to 426 Million U.S. Users through MoonPay Integration

Explore the top Bitcoin Runes meme tokens reshaping the crypto landscape post-halving, with Runes transactions dominating the Bitcoin network as of May 2, 2024.

 event, on Apr 19, 2024, was accompanied by another momentous occasion for the blockchain — the launch of Runes. Right at block number 840,000, the protocol's founder, Bitcoin developer Casey Rodarmor, etched the first Runes token, UNCOMMON•GOODS, officially kick-starting a new era for the 

 blockchain. Following the launch of Rodarmor's own token, a flurry of activity on the chain led to the launch of thousands of Runes tokens, mostly 

, within the first day of Runes’ operations. 

As of May 2, 2024, the number of Runes tokens on the network is already measured in tens of thousands, with dozens of new tokens being etched per hour. By some estimates, Bitcoin Runes transactions make up 68% of all the activity on its network, a feat not witnessed in a long time. What are Runes tokens, and which ones are worth paying attention to right now? We cover it all in this article.

 are fungible tokens created using the Runes protocol, launched right after the latest Bitcoin halving on Apr 19, 2024. It facilitates the efficient issuance and management of fungible cryptocurrencies using the Bitcoin blockchain's native 

Unlike Ethereum-based native assets, Runes tokens' creation and operations don't require any 

 functionality. All of the operations involving Runes are executed by attaching lightweight messages to Bitcoin UTXOs, which represent the outputs of ordinary asset transfers on Bitcoin’s network. These outputs are held as address balances and can be spent during future transactions. 

The launch of Bitcoin Runes led to the creation of thousands of cryptocurrencies based on its network within hours. Most of these tokens are meme coins, although some are envisioned to support future use cases in areas like 

Currently, the most popular crypto marketplaces for trading Runes are 

Runes tokens are taking the Bitcoin community by storm. While many thousands of them now exist, we'd like to cover some of the most notable ones in this review. You’ll notice that these tokens typically have odd, lengthy names. This is mainly due to the requirements of the Runes protocol, which is designed to prevent name squatting at this early stage. 

The length requirement will gradually shorten over time as more 

 are processed. Currently, Runes token tickers must be between 13 and 26 characters. After every 17,500 blocks, the minimum requirement will be reduced by one character.

What better token to start our review with than the very first Runes crypto, UNCOMMON•GOODS, launched by the protocol's founder, Casey Rodarmor? 

Hard-coded as Runes token #0, UNCOMMON•GOODS has no preset 

, which distinguishes it from many other Runes assets. The rules for the token specified by Rodarmor state that its minting will continue until Bitcoin block #1,050,000, which translates to a period of approximately four years from now.

. Given its symbolic status as the first Runes token and a creation of Casey Rodarmor himself, UNCOMMON•GOODS is likely to be among the most valuable Runes cryptos in the future. However, given its extended, four-year mint period, investors will have plenty of time to get their hands on it by waiting for transaction fees to drop before acquiring the token.

This is the Runes asset that's been making giant waves in the Bitcoin Ocean. The DOG•GO•TO•THE•MOON token's entire supply of 100 billion units has been distributed to the holders of Runestone 

. At the moment, the token confidently dominates the market cap and trading volume rankings in the Runes category, leaving the second-place SATOSHI

As of May 3, 2024, DOG•GO•TO•THE•MOON has amassed a market cap of $333 million within just two weeks on the market and is currently trading 

The token's meteoric rise has already prompted comparisons with 

 (DOGE) — the highest-capped meme coin in the industry. While DOGE's $21 billion 

 is vastly higher, many note that it took the king of meme coins several years to become popular, while the DOG token has stolen the spotlight within just a few days of its launch. This is leading some observers to believe that DOG could rise to challenge DOGE in the not-too-distant future.

One of the first Runes to be etched on Bitcoin, SATOSHI

NAKAMOTO is also an exceedingly popular token. As of May 3, 2024, its entire supply of 168,000 units has been minted, creating significant scarcity for the asset 

NAKAMOTO token is currently the second-highest-capped and second most actively traded Runes token on the market, behind the undisputed leader of trading activity, DOG•GO•TO•THE•MOON.

AWAY token is another popular Runes asset inspired by Casey Rodarmor's tweet about committing seppuku if the Runes ecosystem fails to hit $1 billion in market cap within a month of its launch. 

AWAY has a maximum supply of 21 million and was launched on Apr 24, 2024, with a pre-minted supply of 100,000. The remaining 20,900,000 SEPPUKU tokens have also already been minted, with token currently available on Magic Eden for about 18 

RUNE (Runes token #8) is one of the earliest Runes, minted precisely at Bitcoin's 840,000th block. It is currently 

 and has a supply of 21 billion units, with the entire supply having been 

 to holders of the popular RSIC Ordinals NFT collection. Any wallet that had held an RSIC NFT before block #840,000 received a distribution of these tokens. 

The GAME•OF•BITCOIN token has been issued by Ordz Games, a project dedicated to developing gaming solutions for the Bitcoin ecosystem. It currently 

 and boasts an easy-to-remember #111 on the Runes protocol. For anyone who'd like to get their hands on a gaming-related Runes token, the good news is that GAME•OF•BITCOIN's tokenomics doesn't specify any supply cap. Thus, subsequent token mints may be in the cards.

DECENTRALIZED is Runes token #2, which automatically makes it a big deal for any Runes enthusiast. Its entire supply of 21 billion was pre-minted and is currently held by its issuer, the NFT project CyberKongz. DECENTRALIZED currently trades at 5.05 sats ($0.003) on Magic Eden.

 the token's supply would be distributed as follows: 

Derived from a comedic short story penned by Casey Rodarmor in 2021 (and personally endorsed by him), the WANKO

RUNES token currently holds the third-highest market cap among Runes assets. The token's creator had set a mint schedule that allowed the issuance of new tokens between Bitcoin blocks 840,010 and 840,094. During this time, around 75 million tokens, or 7.5% of the 1 billion total supply, were minted. WANKO

Although the token has no active mints right now, there could be opportunities to mint new units in the future as the majority of the total supply remains unissued.

Z•Z•Z•Z•Z•FEHU•Z•Z•Z•Z•Z

The Z•Z•Z•Z•Z•FEHU•Z•Z•Z•Z•Z token claims the honor of being Rune #1, the first asset etched immediately after Rodarmor's UNCOMMON•GOODS. Its maximum supply is specified at 111.11 million units. Of these, 110,000,000 were pre-minted, leaving only a bit more than 1 million tokens to be minted during the first days since its launch. Even though all of this post-launch supply has been minted, you can always get the symbolically important Rune #1 via marketplaces such as Magic Eden. As of the time of writing (May 3, 2024), a unit of the token trades on Magic Eden at 35,147 satoshis, or approximately $0.19.

ECONOMICS has a supply cap of 21 million, all of which have been minted. Although the minting process for the token has concluded, it's widely available on select marketplaces, including Magic Eden. As of May 3, 2024,  MEME

Another Runes token from the first ten etched on Bitcoin, LOBO•THE•WOLF•PUP has a supply of 21 billion, all of which have already been minted by its creator, Buoyant Capital. The token issuer has already airdropped 77.5% of the LOBO supply to three groups: holders of Runestone Ordinals NFTs, Rune Doors Ordinals NFTs, and dual holders of NFTs from both collections. The remaining 22.5% of the supply is reserved by the issuer for project-related initiatives, such as exchange listings, marketing and community development. LOBO•THE•WOLF•PUP is currently priced at 

How Does Bitcoin Runes Differ from BRC-20 and Ordinals?

Bitcoin Runes tokens are often compared to tokens based on another fungible Bitcoin standard — 

. The key difference between the two standards lies in the efficiency of token issuance and operations. While Runes provides an efficient, lightweight method of token etching and minting that’s based on Bitcoin's native UTXO model, the BRC-20 standard creates a large amount of "junk" UTXOs on Bitcoin during token generation and transfer operations, congesting the network and leading to performance degradation.

Another frequently evoked comparison is between Runes and Bitcoin Ordinals. Both are inventions of Rodarmor, who first introduced the Ordinals technology back in January 2023. The key difference between the two is that Runes is a standard for fungible cryptocurrencies, while Ordinals is a protocol designed to facilitate the creation of distinct, non-fungible assets, otherwise known as Bitcoin-based NFTs.

Thanks to the way it leverages the world's largest blockchain, Runes holds significant long-term potential. There are, of course, some downsides to the technology. For instance, it requires two transactions to sell tokens. However, as the protocol matures and major centralized exchanges (

) begin to offer Runes tokens, we expect the adoption of these assets to skyrocket. 

Moreover, new use cases for Runes tokens will emerge, thanks to the first Runes-focused Bitcoin 

 protocols appearing on the horizon. Platforms like RuneChain, a new specialized Layer 2 dedicated to Runes tokens, will further drive the adoption of these innovative crypto assets.

top Bitcoin runes meme tokens.png

Top Bitcoin Runes Meme Tokens You Should Know

Bybit Learn

Options

Strangle options are an investment strategy consisting of two separate option contracts with different strike prices, but the same expiration date.

Unsure about being bullish or bearish with your latest crypto 

 trade? Fortunately, being a crypto options trader grants you the choice of earning profits without being forced to take a side. One example of such an options strategy that takes advantage of volatility is the strangle. By taking positions on both 

, crypto options traders can benefit from any large movements in the underlying asset. 

Keen to learn how to personally plan and execute such trades? From long strangle options strategies that allow you to benefit from movements on both ends of the market to short strangle options strategies that make use of upcoming volatility, here's all you need to know about trading and setting up strangles in the crypto options market.

Strangle options are an investment strategy consisting of two separate options contracts with different strike prices but the same expiration date. This strategy allows traders to benefit from moderately volatile markets by simultaneously trading call and put options at different strike prices.

While this type of investment approach can yield substantial profits, it also carries higher risks than many other trading strategies, due to the need for accurate market timing and understanding the current sentiment.

 (IV) is a key factor to consider when executing a strangle options strategy, as it demonstrates the amount of uncertainty or risk in the market. Implied volatility measures the expected market price movements in an options contract, and is derived from option prices themselves. It shows how much traders think an asset will move over the life of the option, which helps them to decide whether buying or selling options contracts is the right move for them when executing a strangle options strategy. In short, traders expecting more price movement in the near term should execute a long strangle strategy while traders expecting less volatility in price should write a short strangle strategy.

Whether you’re buying calls and puts in anticipation of significant volatility or taking advantage of the implied volatility present by writing calls and puts, the following are the differences between long and short strangle options strategies.

A long strangle options strategy involves simultaneously buying call and put options with different strike prices. This strategy is predicated on the assumption that the underlying security will move significantly in either direction, resulting in a profit from one of the two positions. 

Overall, this type of investment approach carries higher risk than other strategies, since it requires precise timing to properly execute, and the belief that the high IV of the options contracts will result in a large price movement for the underlying crypto asset.

Short strangles are essentially the inverse of long strangles: crypto options traders write, or sell, call and put contracts at different strike prices. This creates a situation where you’ll receive options premiums credited to your account, based on the strike prices at which you’re writing the options contracts. In order to profit from the short strangle crypto options strategy, the options premiums you’re receiving need to be greater than the overall movement of the underlying crypto asset. In other words, by applying this strategy, you’re expecting volatility to fizzle out and the price of the underlying crypto asset to be flat over time.

Strangle options involve trading put and call options contracts at the same time. The idea for long strangles is to profit from the volatility of the underlying crypto asset by playing both sides of the market. In the case of the short strangle, traders seek to earn options premiums by writing contracts, and to profit due to a lack of price volatility.

To do this, strangle options traders need to identify two different strike prices: one higher than the current market price and one lower than the current market price. This range will then determine the strike prices at which traders will execute the strategy.

Once these strike prices have been identified, you can then buy or write both call and put options at these respective strike prices. This essentially gives you a range within which you expect the underlying asset's price to stay. If the price hovers within that range, short strangle strategy executors will rejoice — as they've managed to rake in a profit. Conversely, long strangle strategy traders will hope for the price to exceed this predetermined range in order to turn a profit.

Benefits of Using Strangle Options Strategies

Because long strangle traders are buying both call and put contracts, they’ll make money as long as the price of the underlying asset moves considerably in either direction. This reduces the 

 that the trade will go wrong, since traders will still be able to make a profit if there’s sufficiently large movement, which reduces risk exposure in comparison to separately and exclusively buying only call or put contracts.

Affordable for Traders With Limited Access to Capital

Long strangle options are significantly more affordable than other options strategies, and are designed for options traders with limited access to capital. This is due to the strangle strategy's preference for out-of-the-money options, 

 at-the-money options that possess higher intrinsic value.

Increased Liquidity From Credited Option Premiums

If you're an active crypto trader, you'll definitely appreciate the added liquidity that comes from writing crypto options contracts. By writing call and put contracts, you'll now have access to these funds, which can then be used to generate additional yield. Whether you're utilizing them to trade on additional leverage, or putting them to work by generating passive yield in a staking pool, traders writing short strangle options can definitely get more bang for their buck thanks to this strategy.

Risks of Using Strangle Options Strategies

Since you’re writing call and put crypto options contracts when executing a short strangle, theoretically your potential losses could be considered unlimited, especially on the written call option side of things. If the price exceeds the strike price of the written call, a trader will be forced to buy the underlying asset. They must then sell it at the strike price to the trader who had bought that written call. 

For example, let's say you were to write a short strangle for BTC, with the written call having a strike price of $33,000. If the price of BTC blows past $33,000 and soars to $40,000 at the time of expiry, then traders who wrote this call option will have to fork out an additional $7,000. This is because not owning the underlying BTC would force you to purchase said BTC at $40,000 and sell it to the BTC call buyer at $33,000.

As for the risks concerning the written put, crypto options traders must simply have enough to purchase the underlying crypto at the indicated strike price. This is because if the price falls below the strike price of the written put, you would own the underlying asset at the strike price at which the put was sold. 

Referring back to our aforementioned BTC short strange example, let's go with BTC falling to $25,000 at the time of expiry and you writing a put contract with a strike price of $30,000. This would force you to purchase 1 BTC at $30,000. In this sense, your losses can be considered unlimited as your cost price is now $30,000, regardless of what happens to the price of Bitcoin thereafter the option expires.

By these definitions and examples listed above, losses can be considered limitless as BTC can soar above or plunge below the strike prices of the contracts you've written. This risk of unlimited losses is often why crypto options traders tend to further 

 by purchasing out-of-the-money call and put options, transforming the strategy into an 

Contrary to popular belief, more than half of out-of-the-money options 

. This makes it all the more difficult for inexperienced long strangle options traders to profit, given how such options are the basis for the strategy. 

While the odds for success do increase, the more familiar the options trader is with timing the strategy and gauging existing implied volatility, it's certainly still a risk, considering the complexity of the strategy and how beginners may get left behind.

Strangle Options Strategy vs. Straddle Options Strategy

If you’re new to crypto options trading, you might confuse the strangle strategy with the straddle strategy. These two options strategies are similar in that each one involves writing two contracts, one at a put strike price and one at a call strike price. 

However, the key difference between the two is that with the strangle strategy, you’ll choose two prices that are at a range and further apart than what you would choose for a straddle strategy, which involves trading calls and puts at the same strike price. This means that while the strangle strategy gives you more potential reward, due to the larger distance between the contracts, it also has a greater risk because of the greater exposure to higher volatility in either direction. 

Ultimately, when deciding which approach is best for your own trading objectives, consider how much risk you're willing to take on, and how much reward you expect in exchange for that risk.

How to Set Up the Strangle Options Strategy

Thanks to volatility, the strangle options strategy is one of the most popular methods for traders looking to make a profit with options. 

 contracts and run a long strangle strategy, because we're expecting there to be a greater upcoming price movement than what's accounted for with the current implied volatility stated in the calls and puts contracts. 

With BTC prices at $30,000, we can run a long strangle by purchasing both a call contract and a put contract that are expiring in a month. Specifically, we can consider the 33000C and 27000p contracts expiring on Aug 25, 2023, with strike prices that are out-of-the-money by about 10% from the reference price of BTC. By executing this long strategy, you’ll be paying a total of 0.0194BTC, which is the equivalent of $582 worth of premiums.

Is the Strangle Options Strategy Worth Trying?

The strangle options strategy is a useful tool for both beginning and experienced traders. For beginners, the strangle options strategy helps reduce directional risk, since traders will have exposure to both sides, regardless of whether the price of the underlying asset goes up or down. Novice traders can also make excessive profits if the underlying asset moves far enough in either direction. 

Experienced traders, on the other hand, can use this strategy to capitalize on larger price movements in order to gain bigger profits because of the baked-in implied volatility. However, it’s important to remember that taking on higher levels of risk means greater potential losses as well as rewards, so traders must carefully consider their risk appetite before deciding which options strategies are suitable for them.

In order for crypto options traders to successfully profit from strangle options, it's essential to understand the basics of implied volatility and how that acts like a coiled spring, possibly causing a large movement in prices. From using long strangles to play the ramp-up in volatility, to writing short strangles to profit off expected price movements, we hope our guide has been helpful for you in understanding the basics of trading strangle options strategies.

Strangle Options: How to Profit During Sharp Price Swings

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards