The crypto market is one of the closely watched sectors in India, which is growing rapidly. Beyond the traditional trading and holding of tokens, traders are now increasingly exploring crypto derivatives, especially crypto options trading.
In India, the market is seeing a sharp rise in participation, with traders using platforms like Delta Exchange to access a range of contracts and tools.
In this post, we’ll discuss some of the best options trading strategies that you can try on Delta Exchange and how risk management in crypto can help you protect capital while maximising returns.
The Basics of Crypto Options Trading
Crypto options are derivative contracts that give you (buyer) the right – but not the obligation – to purchase or sell a crypto asset at a specific price before or on a fixed date. The seller is obligated to complete the transaction if you decide to exercise this right. There are two types – calls, which allow buying, and puts, which allow selling.
On Delta Exchange, you can access European-style Bitcoin (BTC) and Ethereum (ETH) options, which can only be exercised at expiry. These contracts come in a variety of strike prices and expiry dates, making them suitable for different market views and options trading strategies.
Crypto options trading has become increasingly relevant in India as the market gains momentum. According to the latest reports, the crypto market in India will likely grow from over $2.5 billion last year to over $15 billion by 2035, with an annual growth of 18.5%.
As more participants enter the market, knowing how calls and puts work helps you speculate on price moves and prioritise risk management in crypto.
Factors to Consider Before Choosing Trading Strategies
Before finalising any bitcoin options trading approach, it’s worth weighing a few practical points to match your strategy, financial goals, and risk appetite:
- Know the strategy well: Understand how it works, its potential gains, risks, and the role of factors like time decay, implied volatility, and option Greeks.
- Prioritise risk management in crypto: Check whether the chosen crypto exchange platform provides risk management tools to minimize your loss.
- Trading costs: Commissions and fees can impact returns, especially for shorter-term options trading strategies.
- Check market conditions: Price trends, volatility, and geopolitical events can influence the crypto price outcome – so, invest and execute strategies wisely.
Some Best Crypto Options Trading Strategies
Here are some effective crypto options trading strategies you can explore:
1. Covered Calls
This strategy involves holding BTC or ETH and selling a call option on the same asset. It works well in bullish-to-neutral markets and allows you to earn premium income while capping potential upside.
On Delta Exchange, covered calls can be part of a balanced risk management in crypto approach, especially if you expect limited price movement.
2. Covered Puts
Here, you short BTC or ETH and sell a put option on the same asset. It suits the bearish market, generating premium income while providing limited upside protection. Many traders use covered puts to add income potential to short positions, making it a flexible choice in downtrending markets.
3. Bull Spread
By using a bull spread (either calls or puts), you profit from a subtle price rise while minimising risks. The call involves buying BTC or ETH at a lower strike and selling it at a higher price; the put works in reverse with bullish bias. Trading Crypto options offers you controlled exposure with defined profit and loss.
4. Bear Spread
A bear spread uses puts to benefit from a moderate price drop in BTC or ETH options. It involves buying a put at a higher strike and selling another at a lower strike – both with the same expiry.
In crypto options trading, it’s a way to manage downside exposure with defined risk and capped profit potential.
5. Iron Condor
In the iron condor strategy, you can combine a bear spread (call) and a bull spread (put) on the same crypto asset with identical expiry dates. You can likely profit from low volatility by collecting premiums from both spreads.
On platforms like Delta Exchange, you can use this in crypto options trading to earn consistent returns.
6. Long Strangle
The long strangle involves buying an out-of-the-money (OTM) call and put with the same expiry but different strikes. Traders expect significant movement in the crypto’s price but are unsure of the direction.
Crypto options usually offer unlimited profit potential if the market moves up, while limiting losses to the premiums and trading fees paid.
7. Long Butterfly Spread
This neutral-to-low-volatility approach in crypto involves buying and selling call options (two each), with different strike prices but the same expiry. It works best when prices stay in a set range, offering limited profit and limited risk.
How to Manage Risks While Trading Options?
Effective risk management in crypto is the key to successful options trading. Here are some ways to minimize losses and make informed decisions on Delta Exchange:
- Try out Delta’s demo account to practice strategies risk-free before investing real money in the market.
- Diversifying strategies, instead of relying on just one approach, helps you reduce risk exposure.
- Set stop-loss orders to automatically exit positions and minimise losses.
- Analyse payoff charts in strategy builder to understand breakeven points, potential profits and losses before finalising a trade.
The Bottomline
Crypto options trading offers a flexible way to navigate both rising and falling markets. By combining the right approach with risk management practices, you can unlock market opportunities based on your risk tolerance. The key lies in familiarising yourself with these strategies and understanding how Delta Exchange works – offering the right platform to test and refine them.
With INR-supported transactions, affordable lot sizes, and 24/7 customer support, Delta ensures you have both the tools and the confidence to explore crypto options effectively.
Disclaimer: Investing in cryptocurrency carries a high risk of market volatility. Kindly do your own research before investing.
