SummaryAlthough call options can be risky, given how Bitcoin has been moving in distinctive cycles, we can deploy call options with relatively less risk to maximize return and minimize risk.This study presents how call options can be used in each stage in the halving cycle, especially the upcoming recovery stage, which is expected to commence in the coming November.If we deployed our strategy laid out here, we would've cut our losses in half.ForewordThis is part 3 of our covered call ETF series. Before reading this article, We highly recommend that you familiarize our previous covered call studies: "QYLD: The One Market Condition That Justifies It" (here) "XYLD: Volatility-Adjusted Distribution Provides More Excess Return Than QYLD" (here) And our thesis on Bitcoin:"Actions Recommended By Bitcoin's Decade-old Cycle" (here)BackgroundOver a year ago, we published our thesis that Bitcoin (BTC-USD) has entered a bear market. That thesis is still relevant today. The 2 main findings of our study were: A typical Bitcoin halving cycle has 3 very distinct stages: a 1 to 1.5-year bull market, a 1-year bear market, and a 2-year recovery stage (Fig 1). The 1-year bear market typically consists of 5 sequences of events (Fig 1). Fig 1. Dissecting The Bitcoin Halving Cycle (Author, TradingView)We updated our thesis back in June 2022 stating that we expect Bitcoin to break below $20,000 to reach $10,000. Bitcoin did break below but reclaimed ...
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