- Underlying: BITO
- View: Cautiously bullish, expecting a consolidation with a potential upside break towards $11.50.
- Strategy Type: Debit Spread / Directional Bullish
- Option Contract Portfolio:
- Buy 1x BITO 2026-05-22 $11.00 Call @ $0.32
- Sell 1x BITO 2026-05-22 $11.50 Call @ $0.11
- Max Gain & Loss:
- Max Gain: ($11.50 - $11.00) - ($0.32 - $0.11) = $0.50 - $0.21 = $0.29 per share
- Max Loss: Net Debit Paid = $0.21 per share
- Initial Cost/Credit: Net Debit of $0.21 per share (or $21 per 100-share contract).
- Greek Exposure:
- Delta: +0.30 (Moderate Positive). Benefits from upward price movement.
- Theta: -0.02 (Slightly Negative). Minor daily time decay cost.
- Vega: -0.01 (Slightly Negative). Small negative exposure to volatility, which is acceptable given high IV percentile (96.81%).
- Gamma: +0.08 (Positive). Delta will increase as price moves towards $11.00-$11.50.
- Rho: Negligible for short-term options.
- Rationale: This strategy is optimal for a cautiously bullish view with extremely high implied volatility (IV Percentile: 96.81%). A bull call spread defines and limits both risk and reward. Buying the $11.00 call provides directional upside exposure, while selling the $11.50 call at the key resistance level helps offset the high cost (due to high IV) of the long call, resulting in a lower net debit. The trade profits if BITO is above $11.21 at expiration, aligning with the view of a move towards $11.50. The high IV environment makes buying naked calls expensive; this spread mitigates that cost.
- Time Frame: Short-term (1 week to expiry).
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