Crypto options are an aggressive moneymaking strategy, for sure. You can risk a little to get a little, or a little more to get a lot, or you can stake a lot for a chance at a huge windfall-type win.
And in some cases, you don’t actually need to own the crypto to trade, or you trade because you want to get your crypto at a much better price.
There are all kinds of moves you can make. My Digital Heavyweights subscribers and I make one of these trades every week. Our very first one was nice and conservative, a put trade, and it gave us the chance to pocket at least 800 bucks’ worth of premium.
It’s always nice when your trading strategy is decaf and your wins are dark-roast. That’s the goal.
What you shouldn’t do is approach it like gambling – people who do usually get wiped out. During the crypto bull run, I lost count of how many people leveraged up – 120X, in some crazy cases – only to be crushed by the smallest moves.
Always use small, sensible portions of your capital; don’t invest anything you’re not prepared to lose. Like crypto, the secret to success is balance.
Here’s how you can get started, too…
Before You Make Your First Real Trade
Like I said, options trading – specifically crypto options – can be riskier than investing, depending on your strategy and approach. In Digital Heavyweights we make low- to moderate-risk plays selling options premium, and someday there could be a risk that some of our crypto might be called away from us.
That’s why I always recommend people begin with paper trading – think of it as “pretend” trading – before they risk a dime of real money. There’s no better way to get a feel for how options work, how they can pay off, and how they can sometimes move against you. I really can’t recommend it strongly enough – it’s just not a good idea to jump in headfirst.
Brokerages like eToro and Cryptohopper, for example, let you paper-trade online, using their platform, which is a pretty good simulation of how it “feels” to trade for real.
Personally, I prefer the old pen-and-paper method. I write trades down that I’m interested in and record how they perform. You can see, in black and white, where things went great and where things might’ve gone wrong, and you haven’t risked any capital whatsoever.
Do this until you’re 100% comfortable trading real money.
I like to do my real trading on FTX’s LedgerX, which nowadays goes by the not-as-flashy name FTX U.S. Derivatives. Here’s how it works.
How to Get Started on My Favorite Platform
I don’t use FTX because I’m a huge fan of FTX, or Sam Bankman-Fried or anything – it’s the network effect, plain and simple. I’m talking liquidity. You want to buy options where everyone else is buying options. That means more options to buy and sell, more people to do the buying and selling. Simple enough.
To started, you can go right here. From there, you’ll see in the upper right corner where it says “Get Started.” Click on that, and you’ll end up at a page that looks like this.
Just provide your email address, and in a few minutes, you should get an email in your inbox. It should look something like this.
From there, you’ll need to click the “verify email” button to continue on the Ledger X webpage. You’ll need to specify weather you are going to be trading on behalf of yourself or an organization.
Now comes the documentation. Like any bank, FTX has to abide by U.S. anti-money laundering and “Know Your Customer” rules, so you’ll need to flash your bona fides to prove to FTX that you are who you say you are. This is for your benefit, too; there are exchanges in the world where they don’t have these requirements, and they’re not nice places – not safe, either.
You’ll have several options for documents you can use, like a driver’s license, other state-issued ID, or a United States passport.
That being said, the driver’s license is probably going to be the most common. You’ll be able to make your choice and upload the document to the website from a page that looks like this:
Once you’re verified, you’re good to go – you’ll be able to access the trading page.
We’re not done yet, though. We still need something to trade with.
To get started, you’ll need to transfer either crypto or fiat currency to the FTX platform. If you want to send Bitcoin, you’ll just need to select “Transfer Funds” in the upper left corner of the screen, and then select Bitcoin. You can then click “generate new address” to get an address where you can actually send the Bitcoin. Ledger X recommends creating a new address for each individual transfer. I happen to agree – that’s a smart idea.
Dollars, though, are a bit more complicated – just a little bit. You’re still going to “Transfer Funds,” but basically, you’ll need to send a wire transfer from a bank. And be aware the name on the bank account needs to match the name on your FTX account.
From the “Transfer Funds” menu, select “Deposit USD” and plug in the amount you want to transfer. You’ll need to set up a wire transfer from your bank, using your FTX account number as the memo or reference, and the info for Silvergate Bank which can be found here. Save the reference number they’ll give you, just in case, and the money should arrive within two weeks, often much faster.
Once that’s all done, you’ll be ready to trade crypto options. Get paper trading, and hopefully before long I’ll see you in my Digital Heavyweights livestream sessions.