AI Options Strategy: The Pivot
I initially asked the AI for innovative strategies to maximize income. The results (see Section 2 below) were fascinating and mathematically sound, suggesting we sell Puts to capture high premiums.
However, upon closer inspection, I realized these strategies carried a "dark" risk: if Bitcoin were to collapse, the value of the portfolio could be wiped out. The potential downside was too severe.
The Decision: I abandoned the Put-selling strategy in favor of results that were more emotionally acceptable. We reverted to Selling Covered Calls (see Section 1). With this approach, the only risk is capping our upside if Bitcoin moons (e.g., over $105k). We never risk losing the underlying Bitcoin collateral.
Table of Contents
1. The Accepted Strategy: Covered Calls
Goal: End the quarter with either More Bitcoin or More Dollars. No risk of wipeout.
The "HODLer"
Prioritizes keeping your Bitcoin above all else.
Verdict: Pure safety play. You are essentially betting that BTC won't double in 60 days, just to earn a tiny yield.
The "Yield Generator"
Balances meaningful income with upside room.
Verdict: The balanced choice. You leave room for BTC to rally ~7% before you are capped, while earning a respectable yield.
The "Cash Out"
Max income now; okay with selling for profit soon.
Verdict: Maximize "More Dollars." If BTC moves up slightly, you cash out at a profit and keep the highest available time-value premium.
Type a hypothetical scenario below (e.g., "BTC crashes to $80k next week" or "Bitcoin rallies to $150k"). The AI will project the PnL and outcome for all three accepted strategies.
2. The Rejected Strategy: Selling Puts
Goal: Maximize Income or Probability. Why Rejected: If BTC crashes below strike, we are forced to buy more BTC at a loss, potentially wiping out collateral value.
The "Professional"
Short Call (OTM)
Technically safe, but rejected in this context as part of the initial "Capital Preservation" bucket that yielded zero income.
The "Balanced" Analyst
Short Put (OTM)
Risk: While it had an 85% chance of success, a crash below $75k would result in significant losses. This "dark outcome" was deemed unacceptable.
The "Extremist"
Short Put (Deep ITM)
Risk: A directional bet. You are effectively buying BTC at $340k minus premium. Massive downside if BTC drops, which contradicts the goal of safety.
Disclaimer: This analysis is generated by AI models for educational purposes only. It does not constitute financial advice. Options trading involves significant risk. This tool requires a Gemini API key to function.