Trading binary options isn’t just about making bets — it’s about managing the risks.
Delta Hedging
Delta measures how much an option’s price moves relative to the underlying asset. For binary options, delta explodes as MSTR nears the strike price.
- Challenge: Rapid price changes can wipe out profits.
- Solution: Use dynamically adjusted vanilla options to neutralize delta exposure.
Gamma Management
Gamma measures how fast delta changes. It’s the second derivative of the option price, and it spikes near expiration.
- Challenge: High gamma increases volatility in your portfolio.
- Solution: Add ATM (at-the-money) options or widen the call spread to smooth out spikes.
Bitcoin Correlation
MSTR’s strong link to Bitcoin means you’re not just trading a stock — you’re trading Bitcoin’s volatility.
- Hedge: Use Bitcoin futures or options to manage the broader correlation risk.