Too Long; Didn't Read
In 2019, Bitcoin's volatility was erratic. On one day alone, the price of bitcoin changed by over 40%. However, for most days, the change in price hovers around 1%-2%. This article will look at various options strategies that can capitalize on BTC’s volatility clustering (i.e. heteroscedasticity) and compare these strategies to how well a simple buy & hold portfolio performed. At the end, I will cover portfolio optimization and diversification in order to show that, overall, the best performing portfolio comes from a combination of the option strategies and buy and hold.