Financial Insights That Matter
What could happen?
| IBIT Price at Expiry | What Happens | Net Outcome |
|---|---|---|
| Above $55 | You don’t buy the shares. You keep the $124 income. | +$124 return on $5,500 in 28 days (2.25%) |
| At or below $55 | You buy 100 shares of IBIT at $55. Effective price: $53.76 | You now own the ETF at a discount |
| Far below $55 | You must still buy at $55, even if market price is lower. | Same risk as owning the ETF outright, minus the $124 income |
So what exactly is a cash-secured put?
Let’s simplify the term:
- A put option gives someone else the right to sell you a stock or ETF at a specific price.
- If you sell that option, you’re agreeing to buy it — but only if the price drops.
- Cash-secured means you’ve already set aside the full amount of money needed to buy, just in case.
So you’re saying:
“I’m happy to buy IBIT at $55 if it drops — and I’ll take $124 right now for making that offer.”
It’s similar to setting a limit order, but with the added benefit of getting paid up front.
Why long-term investors consider this
- You only risk buying something you want to own anyway.
- You define your entry price in advance.
- You earn income for your patience — while your cash is reserved.
- The strategy is low maintenance and works well for buy-and-hold investors.
What are the risks?
- If IBIT falls well below $55, you’re still obligated to buy it at $55.
- Your cash is tied up for 28 days, earning no other return.
- IBIT is tied to Bitcoin, which can be volatile. The premium offers a cushion, but not protection against large drops.
The table below can help clarify the financial impact of different outcomes:
| IBIT Price at Expiry | Assigned to Buy? | Effective Purchase Price | Net Result |
|---|---|---|---|
| $59.00 | No | – | +$124 |
| $55.00 | Yes | $53.76 | $0 |
| $50.00 | Yes | $53.76 | –$376 |
| $45.00 | Yes | $53.76 | –$876 |
Frequently asked questions (FAQ)
Q: What if I don’t want to buy IBIT at all?
Then this strategy isn’t for you. Only use it if you’re willing — and financially able — to own the ETF at the strike price.
Q: What happens to the premium I collect?
You receive it up front, and it’s yours to keep — regardless of whether you buy the ETF later.
Q: Is this safer than just buying IBIT today?
It depends on your view. You might get it at a lower price, but you might also miss out if IBIT rises and never drops to $55.
Q: Can I lose money?
Yes. If IBIT drops significantly, you could face losses just like any ETF investor — although the premium slightly offsets that.
Q: What’s the worst-case scenario?
You’re required to buy IBIT at $55, and its market price drops well below that. Your maximum loss is similar to owning the ETF directly, reduced by the premium you received.
Final thoughts
If you’re considering long-term exposure to Bitcoin and prefer to avoid the complexity of crypto wallets or exchanges, IBIT may be a suitable option. And if you’re willing to be patient — and hold cash while waiting for a better price — selling a cash-secured put offers a structured, disciplined way to enter.
You can either collect income now or potentially own the ETF at a lower price. It’s not a shortcut or a guarantee — but for the right investor, it’s a smart way to stay engaged without chasing the market.
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