Crypto holders have massive expectations for bitcoin under the incoming Trump 2.0 administration. These huge hopes have nearly doubled the price of bitcoin since September. I want to lean on the old adage of “buy the rumor, sell the fact.” With BTC back above $100,000, I want to use options to implement some inexpensive downside protection in the iShares Bitcoin Trust ETF (IBIT) . IBIT ALL mountain iShares Bitcoin Trust While “Hodlrs” are looking for another new all-time high in bitcoin, I am preparing for a retracement. The last significant drawdown in bitcoin occurred in May 2024 when it experienced a nearly 25% pullback from its peak. I believe a pullback of this size would be healthy, but longer-term holders of BTC know that even bigger drops are an inherent characteristic of this specific cryptocurrency. Per AI assistant on X (Grok), here’s some historical context: Since 2013, Bitcoin has seen six drops of 70% or more, each followed by significant rallies. After Bitcoin’s price traded above $100,000, for the first time in December 2024, the cryptocurrency community has been frothing at the mouth anticipating Trump’s fulfilment of his campaign promise to make the US the “crypto capital of the planet”. The Trade (Buying IBIT put spread) Bought the IBIT $56 2/21/25 Put for $2.80 Sold the IBIT $50 2/21/25 Put for $1.00 Costing an investor $1.80 or $180 per put spread IBIT trading roughly $58.50 The reason I want to buy a put spread is that I define my risk. And in the event bitcoin continues to surge higher and MicroStrategy’s bitcoin promoter Michael Saylor is right, this put spread will expire worthless after the first month of Trump 2.0. In the event there is a pullback, this debit spread will be profitable. DISCLOSURES: (Long bitcoin and long this spread.) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
