Bitcoin’s August tranquility has defied the anticipations of many market watchers, with the cryptocurrency’s price charting a relatively stable course. As the air of calmness seems set to linger, 10x Research has spotlighted the “short strangle” strategy as a prime approach for the coming month.
Navigating a Steady Landscape
In the unpredictable world of Bitcoin (BTC), where dramatic price swings often make headlines, August has been a month of surprising serenity. Trading within a somewhat narrow band, Bitcoin’s price is hovering around $113,000, with expectations of staying between $95,000 and $125,000 in the near term. Against this backdrop, Markus Thielen, founder of 10x Research, suggests that the short strangle approach could be particularly opportune. This aligns with insights from Bitcoin Traders Eye Upside as BTC Holds Above $110K, which highlights the current stability as a potential launchpad for future gains.
“The current dynamics in the bitcoin options market make a short strangle well-suited for the next month,” Thielen shared in a recent report to clients. The strategy involves writing out-of-the-money (OTM) options—selling a put near $95,000 and a call close to $125,000, both expiring in September. This maneuver allows traders to pocket premiums, hoping Bitcoin remains in the projected range.
The Mechanics of the Short Strangle
In essence, the short strangle strategy is akin to selling a form of financial insurance. Traders earn premiums by betting on the stability of Bitcoin’s price, and the maximum profit is realized if the asset stays between the two strike prices. The key appeal here is that the implied volatility (IV)—the market’s expectation of future volatility—exceeds realized volatility. This disparity suggests options are overpriced, making it an appealing moment for strangle sellers to capture richer premiums.
“The strategy works because the implied volatility curve is trading above realized levels, signaling options are overpriced, and the market is unlikely to deliver substantial moves outside your defined range in the short run,” Thielen elaborated. This setup paints a picture of near-term calm, as indicated by the implied volatility term structure. However, as noted in Bitcoin traders say BTC price at ‘make-or-break’ point at $110K, the market’s stability is being closely watched for any signs of a breakout.
Weighing the Risks and Rewards
For the short strangle to pay off, Bitcoin must continue its rangebound dance between $95,000 and $125,000. As demand for OTM calls and puts dwindles, premiums drain, generating profit for those who have sold strangles. Thielen’s earlier recommendation, which involved a $105,000 put and a $130,000 call, yielded a 3.5% return, highlighting the strategy’s potential when market conditions align.
However, this approach is not without its perils. A sudden spike in volatility could lead to notable losses, necessitating vigilant monitoring of market variables to manage risk effectively. Traders must be prepared to adjust their positions if signs of turbulence emerge.
Looking ahead, the question remains whether Bitcoin’s current placidity will persist or if the market is merely pausing before its next rollercoaster ride. As traders and analysts keep a watchful eye on the evolving landscape, the short strangle strategy offers an intriguing avenue for those betting on continued stability—or at least hoping for it.
Source
This article is based on: Bitcoin ‘Short Strangle’ Preferred as Market Signals Near-Term Calm: 10x Research
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
