Panic or Opportunity? Using COIN and MSTR Options to Trade Crypto's Crash

Since early October, Bitcoin has pulled back from its highs of around 126k USD, at one point briefly breaking below 90k. The total crypto market cap has shed roughly 1.2 trillion USD over the past six weeks.

There are many reasons behind this leg down in crypto, but fund and ETF selling has been a major driver. The wave of funds' liquidation was triggered partly by fading rate-cut expectations, which reduced risk appetite, and partly by the fact that many crypto assets have now fallen below their levels at the start of the year. This has pushed their year-to-date performance into negative territory, forcing some speculative capital to cut losses and adding further selling pressure.

As a result, crypto-related equities have sold off in tandem:

In July 2023, the high was 31,906 and the August low was 24,305, a drawdown of about 24%.

In March 2024, Bitcoin peaked at 73,783 and later fell to a low around 49,000 in August, a drawdown of about 34%.

In January 2025, Bitcoin’s high was 109,640, and the low in April was around 74,580, a drawdown of roughly 32%.

Across these three episodes, the market seems to have reached a CONSENSUS: for BTC, 30% drop is an important psychological threshold: once the decline reaches this depth, the bulls often feel "avoir-raison" to step back in.

In the current pullback, Bitcoin’s high was 126,199 and the latest low has been 89,253, which is almost exactly a 30% drawdown. I don’t have sufficient evidence to argue that this correction is definitively over, but for investors who are structurally bullish on crypto over the long term, it seems reasonable to pay attention.

If you’re interested in crypto-related equities, the following options strategy discussion may be worth your time.

Coinbase’s latest closing price is about $261, more than 40% below its year-to-date high of $444. Its 2026 forward P/S ratio is around 8–9x, which sits in a relatively reasonable range.

Options currently imply a volatility of around 63%, with an IV Rank of 43, which is not particularly elevated. This indicates that the market is not in a state of extreme fear toward the stock. However, the absolute level of implied volatility is still quite high, which makes using a short put strategy to bet on a rebound a viable approach.

Investors can consider selling puts expiring in 4–6 months with a 150 strike, purely to collect premium.

Investors can also raise the strike or shorten the tenor to collect more premium, in exchange for taking on a higher risk of assignment (i.e., being put the stock).

After its extended decline, MSTR’s implied volatility has not exploded either. Its IV Percentile is around 66%, while its IV Rank is only about 22%. But because the base level of volatility is so high, the current IV is still above 92%, which makes short puts a fairly attractive way to “bottom-fish.”

Investors can consider selling puts with 3-month maturities and strikes 35–50% below the current spot price.

For investors who are underwater on MSTR after the recent decline, a covered-call strategy can be used to gradually recover principal. A suitable tenor would be 3–4 months, with the call strike set at or slightly below the investor’s cost basis.

For example, if an investor’s cost basis is 300, they could sell a call expiring in February and collect about 8.5 USD in option premium. If, within three months, the share price rises back to 300, they effectively recover their principal and exit the position at breakeven.