The most well-known form of cryptocurrency is Bitcoin. I am frequently asked about the use of crypto with our covered call and cash-secured put trades. In this article, a 29-day collar trade s analyzed, using Bitcoin, to construct a defensive, modest-return trade. A real-life example with iShares Bitcoin Trust (Nasdaq: IBIT) is presented.
What is IBIT?
This is an exchange-traded fund (ETF). The shares are intended to constitute a simple means of making an investment similar to an investment in bitcoin rather than by acquiring, holding and trading bitcoin directly on a peer-to-peer or other basis or via a digital asset exchange. Since the implied volatility of this security is robust, there is flexibility that allows us to craft low-risk (not no-risk) trades that still offer significant initial time-value returns.
What is a collar trade?
This is a covered call writing-like strategy where a protective put is added to a covered call writing trade. The 3 legs of the trade are:
- Long stock position
- Short call position (ceiling)
- Long put position (floor)- This establishes a hard floor
Here is an image of the collar strategy:
Real-life collar trade with IBIT
- 1/23/2026: 500 x IBIT purchased at $50.55
- 1/23/2026: STO 5 x 2/20/2026 $52.00 calls at $1.65 (ceiling)
- 1/23/2026: BTO 5 x 2/20/2026 $48.00 puts at $1.08 (floor)
IBIT call & put option chains for this collar trade
- The $52.00 call strike showed a bid price of $1.65 (yellow oval & cell)
- The $48.00 put strike showed an ask price of $1.08 (brown oval & cell)
Calculations without the protective put (covered call aspect)
- The BCI Trade Management Calculator (TMC) is used for these calculations
- This is a traditional 29-day covered call trade (red circle)
- The breakeven price point is $48.90 (yellow cell)
- The initial premium returns are 3.26%, 41.08% annualized (brown cells)
- There is additional upside share appreciation potential of 2.87% (purple cell)
- Total cash collected from the sale of the 5 call contracts is $825.00 (pink cell)
Calculations using the BCI Collar Calculator (adding the protective put)
- This is actually a 29-day trade when including the day of trade entry
- The net option credit is $0.57 ($1.65 – $1.08)
- Red arrow: The initial return on the net option credit is 1.13%
- Blue arrow: The annualized return on the collar trade is 14.70%
- Green arrow: If the share price moves above the call strike by expiration, a 4% return is realized (maximum return)
- Pink arrow: The max return annualized to 52.09%
- Purple arrow: If share price moves below the put strike, there is a loss of 3.92% (max loss)
- Yellow arrow: The max loss annualizes to 51.06%
Can we calculate collar trades using the BCI Trade Management Calculator?
Yes, here’s how: When entering the call option premium in the spreadsheet, enter a net credit amount. In this trade it is $0.57 ($1.65 – $1.08).
Alan Ellman’s Complete Encyclopedia for Covered Call Writing Volume-2
An adjunct to the original Volume 1 with new and enhanced information on low-risk wealth-building strategies for average investors, utilizing stocks and options to create monthly cash flow.
Click here for more information.
Free training resources
Your generous testimonials
Over the years, the BCI community has been incredibly gracious by sending our BCI team email testimonials sharing stories as to what our educational content has meant to their families. Moving forward, we have decided to publish several of these testimonials in our blog articles. We will never use a last name unless given permission:
New Quasar Markets interview:
1. MoneyShow Masters Symposium Las Vegas
July 20 – 22, 2026
Caesars Palace Hotel
Las Vegas
Details to follow.
2. Toronto Money Show
September 24 – 25, 2026
MaRS Center, Toronto Canada
3. Orlando Money Show
October 5 – 7, 2026
Hilton Orlando Lake Buena Vista
Details to follow.
4. American Association of Individual Investors: NYC Chapter
Date and time to be confirmed.
5. Triple Edge Investing Summit: Technical Analysis • Options Strategies • ETF Mastery
Saturday January 23, 2027
Zoom presentation
Paid event
All-day event hosted by 3 experts:
- Dr. Alan Ellman (options)
- Dr. Eric Wish (technical analysis)
- Les Masonson (ETFs)
Hosted by TraderLion University
Details to follow.
Premium Members,
This week’s Weekly Stock Screen and Watch List has been uploaded to The Blue Collar Investor Premium Member site and is available for download in the “Reports” section. Look for the report dated 06/05/26.
Be sure to check out the latest BCI Training Videos and “Ask Alan” segments. You can view them on The Blue Collar YouTube Channel. For your convenience, the link to the BCI YouTube Channel is:
https://www.youtube.com/user/BlueCollarInvestor
Barry and The Blue Collar Investor Team
Hi Alan,
I am revisiting the Ask Alan Library and have a question regarding weekly calls and puts.
Are there any guidelines similar to those outlined in Ask Alan #107 for weekly’s?
Best,
Jon Z.
Jon,
To respond to your question, I rewatched the video which I produced 12 years ago. Still holds up.
The 20%/10% guidelines assist us is when to close our option positions in a monthly contract.
20% of the original premium price in the 1st half of the contract and 10% in the 2nd half.
The 10% guideline would apply to weekly options.
As expiration Friday approaches, if we can monitor our positions, the BTC/GTC limit orders can be removed. Otherwise, keep them in place for protection.
Make sure you get broker notification if the threshold is reached and the short calls or puts are closed.
Alan
Premium Members:
1. This week’s ETF Report has been uploaded to your member site. Login to the member site and scroll down on the left side to access the report.
ETF Report Video Link:
Explanation of the report format:
https://youtu.be/addf7Y54ixwput
2. I’ve attached to premium member emails 2, 11-day covered call trades with MNST, an elite-performing stock at the time of the trades. 2 contracts were defensive, 1 aggressive. I executed these trades on 6/8/2026, for the 6/18/2026 expiration. MNST closed at $91.21 today, up $1.91 from trade entry. The current price is above both breakeven strikes ($86.45 and $88.80). As always, I remain prepared to execute exit strategies, if those opportunities arise.
3. Our loyalty pledge to you: Premium members will NEVER experience a rate hike as long as premium member subscriptions remains active … NEVER.
4. New Quasar Markets interview Video:
https://x.com/i/broadcasts/1MKgNNyDnpWxL
Wishing you the best results,
Alan & the BCI team