In a bid to optimize portfolio performance, research firm 10x is championing the adoption of a sophisticated options strategy for Bitcoin (BTC) investors, potentially boosting yields by a substantial 17%.

The strategy, termed the 'covered strangle,' is gaining traction among savvy investors seeking to augment returns alongside their traditional spot market holdings. 10x, renowned for its astute market predictions, has recommended this approach as a viable means to capitalize on Bitcoin's market dynamics.

So, what exactly does the 'covered strangle' entail? It hinges on simultaneously holding the underlying asset in the spot market while selling out-of-the-money (OTM) call and put options. These options are strategically positioned above and below the prevailing market price of the asset, respectively.

The premium received from selling these options serves a dual purpose: it acts as a hedge against potential price rallies (through the sale of call options) and provides insurance against downturns (via put options), thereby unlocking additional yield for investors.

According to 10x's proposal, investors are encouraged to sell a call option with a strike price of $100,000 (50% above BTC's current market price) and a put option with a strike price of $50,000, both expiring in December 2024, while maintaining BTC holdings in the spot market.

Markus Thielen, the founder of 10x Research, elaborated on the strategy, stating, "Our favorite strategy is to buy bitcoin Spot, Sell 100,000 strike call, and Sell 50,000 strike put for the December 2024 expiry. Selling the call could yield 11%, and selling the put could yield 6%."

This approach offers a compelling proposition, providing investors with a 17% downside buffer or additional yield, contingent upon Bitcoin's performance at the December expiry date. Notably, investors stand to capture the full upside potential of Bitcoin's price movement, while mitigating downside risks.

However, it's crucial to note that the 'covered strangle' strategy is best suited for bullish market conditions characterized by a gradual uptrend and low implied volatility. In such scenarios, out-of-the-money options tend to lose value rapidly as expiry approaches, favoring sellers.

Despite its allure, this strategy is not without its risks and demands a high risk tolerance. Potential losses are magnified if Bitcoin's price dips below the put option's strike price, underscoring the need for prudent risk management.

Ultimately, 10x's endorsement of the 'covered strangle' strategy reflects a nuanced approach to portfolio management, tailored for investors confident in Bitcoin's gradual ascent and resilient against potential corrections. As Bitcoin continues to demonstrate robust year-to-date gains, the adoption of sophisticated strategies like the 'covered strangle' underscores a growing sophistication within the cryptocurrency investment landscape.