Strategy · Hedging

PROTECTIVE COLLAR ON SPOT BTC

NeutralDefined riskAdvanced

Overview

Hold spot BTC, buy a protective put 10% OTM, and sell a covered call 10-15% OTM to finance the put. Caps both upside and downside for a defined-risk window.

Setup

1.Hold at least 1 BTC equivalent of spot.
2.Buy a 30-60 day put 10% below current price on Deribit.
3.Sell a 30-60 day call 10-15% above current price to offset put cost.
4.Aim for net-zero or net-credit collar.
5.Roll the structure monthly to maintain protection.
6.Close early if you change your directional view.

Max profit

Distance from spot to call strike, plus net credit (capped).

Max loss

Distance from spot to put strike, minus net credit (defined).

Breakeven

Spot price ± net premium paid or received.

When to use

Around major catalysts when you want defined-risk exposure without selling spot.

When to avoid

When you have unwavering bullish conviction — the call cap will hurt during big rallies.