Navigate Earnings with Coinbase Puts – A Traders Guide

Navigate Earnings with Coinbase Puts – A Traders Guide

Options 6 minutes to read
Saxo Be Invested
APAC Research

Coinbase Global Inc. (COIN) is scheduled to report its Q4 2024 earnings on Friday morning, February 14, 2025. Given the anticipated volatility surrounding this event, a cash-secured put strategy could be an effective way to potentially acquire COIN shares at a desired price while earning premium income.

Understanding Cash-Secured Puts

Selling a cash-secured put involves writing a put option on a stock and setting aside sufficient cash to purchase the stock if the option is exercised. This strategy is typically employed by investors who are willing to buy the underlying stock at a specific price (strike price) and seek to generate income through the option premium.

Current Market Context

As of February 11, 2025, COIN is trading at $280.22. The upcoming earnings report has heightened implied volatility in COIN options, reflecting market uncertainty. Historically, COIN’s stock has exhibited significant post-earnings movements, underscoring the importance of careful strategy selection.

Implementing the Cash-Secured Put Strategy

1. Select an Appropriate Strike Price and Expiration Date:
- Strike Price: Choose a strike price at which you’re comfortable purchasing COIN shares. For instance, selling a put with a strike price of $250 means you’re willing to buy COIN at $250 per share if assigned.
- Expiration Date: Options expiring shortly after the earnings date, such as February 14, 2025, will capture the earnings-related volatility.
chart

2. Analyze Premiums and Implied Volatility:
- Higher implied volatility leads to higher option premiums. Selling a put option in this environment allows you to collect more premium, compensating for the increased risk. E.g. 15 delta volatility has risen to 108 from 84 last week.

3. Calculate Potential Outcomes:
- If the Stock Price Remains Above the Strike Price at Expiration: The put option expires worthless, and you retain the premium as profit.
- If the Stock Price Falls Below the Strike Price at Expiration: You’re obligated to purchase COIN at the strike price, effectively acquiring the stock at a discount (strike price minus the premium received).

Example: Selling a Cash-Secured Put on COIN
- Strike Price: $250 that is recent double bottom and 50% Fibonacci retracement between swing high and low since September last year
- Expiration Date: February 14, 2025
- Premium Received: Work as a limit order at $5 per contract where this option mostly traded this month so far

4. Potential Outcomes:
- COIN Closes Above $250 at Expiration: The option expires worthless, and you keep the $500 premium (since each option contract represents 100 shares).
- COIN Closes Below $250 at Expiration: You’re assigned and purchase 100 shares at $250 each, but your effective purchase price is $245 per share ($250 strike price - $5 premium).

5. Considerations:
- Assignment Risk: Be prepared to purchase COIN shares if the option is exercised.
- Earnings Volatility: Earnings announcements can lead to significant stock price movements. Ensure you’re comfortable with the potential scenarios.
- Risk Management: Allocate sufficient capital to cover the purchase if assigned and consider setting aside additional funds to manage potential further declines in stock price.

Conclusion

Selling cash-secured puts on COIN ahead of its earnings report can be a strategic way to generate income and potentially acquire shares at a favorable price. However, it’s crucial to assess your risk tolerance and investment objectives, especially given the heightened volatility surrounding earnings events. Consulting with a financial advisor is recommended to ensure this strategy aligns with your overall investment plan.

Quarterly Outlook

01 /

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Chief Investment Strategist

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...

Content disclaimer

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Bank A/S and its entities within the Saxo Bank Group provide execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer and notification on non-independent investment research for more details.
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-mena/legal/disclaimer/saxo-disclaimer)


Business Hills Park – Building 4,
4th Floor, office 401, Dubai Hills Estate, P.O. Box 33641, Dubai, UAE

Contact Saxo

Select region

UAE
UAE

All trading and investing comes with risk, including but not limited to the potential to lose your entire invested amount.

Information on our international website (as selected from the globe drop-down) can be accessed worldwide and relates to Saxo Bank A/S as the parent company of the Saxo Bank Group. Any mention of the Saxo Bank Group refers to the overall organisation, including subsidiaries and branches under Saxo Bank A/S. Client agreements are made with the relevant Saxo entity based on your country of residence and are governed by the applicable laws of that entity's jurisdiction.

Apple and the Apple logo are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.