Coinbase (COIN) has rallied nicely back above the 21-day moving average as Bitcoin has gained roughly 7% over the last month.
The resurgence in crypto prices has translated into renewed strength in COIN, as traders look to leverage the correlation between the exchange and its underlying assets.
Given the current setup, today we’re exploring an unbalanced iron condor strategy — a variation of the traditional iron condor that can provide a slightly directional bias.
In this case, the bias is skewed slightly bullish to take advantage of the improving technical backdrop in both Coinbase and the broader crypto space.
As a refresher, a standard iron condor involves selling a bull put spread and a bear call spread at the same time.
The goal is for the underlying stock to stay within a defined range through expiration so that all the options expire worthless, allowing the trader to keep the premium.
To skew the trade bullishly, we can either sell more put spreads than call spreads, or use higher delta strikes on the put side, which increases potential profit if the stock moves upward while still keeping the core rangebound structure of a condor.
Using the June 20 expiry, we can structure the bull put side by selling two put spreads at the $150-$145 strikes. This spread is currently trading for around $0.90, and selling two contracts generates roughly $180 in premium.
For the bear call spread, we sell the $300 call and buy the $310 call, which brings in about $0.40 in premium.
With one contract on this side, the trade collects another $40.
In total, the iron condor would generate around $220 in premium, which represents the maximum profit if COIN remains between the breakeven points by expiration.
The profit zone ranges from $147.80 to $302.20, calculated by adding and subtracting the net premium from the short strikes.
As long as COIN stays within this range, the trader stands to make some or all of the $220 received upfront.
The maximum risk on the trade is $780, for a potential return on risk of approximately 28%, which is calculated by dividing the premium ($220) by the maximum risk ($780).
To manage the downside, a stop-loss could be placed at around 25% of the capital at risk, or about $195, depending on the trader’s risk tolerance and how actively they monitor the position.
Below is the risk graph, showing both the P&L at expiration and the T+0 line, giving you a real-time snapshot of how the trade may evolve under different market scenarios.
Company Details
The Barchart Technical Opinion rating is a 72% Sell with a Weakening short term outlook on maintaining the current direction.
Founded in 2012 by Brian Armstrong, Coinbase is the largest U.S.-based cryptocurrency exchange, offering access to over 50 digital assets. The company has become a key bellwether for crypto market sentiment, often moving in tandem with Bitcoin and Ethereum.
Summary
Unbalanced condors offer a smart way to profit from a neutral to moderately bullish outlook while keeping defined risk.
They’re especially effective in choppy or rangebound markets where you want some directional exposure without going all-in on a single side.
Please remember that options are risky, and investors can lose 100% of their investment.
This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.
On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
