--- title: The Options Recipe Behind HBTC's Strategy description: Discover how HBTC's innovative options strategy balances Bitcoin exposure with protective hedging, aiming to minimize losses while capturing upside potential. image: https://www.fortunafunds.com/hubfs/Blog%20Images/Stack.png --- [Skip to content](https://www.fortunafunds.com/fortuna-funds-blog/the-options-recipe-behind-hbtcs-strategy#main-content) [![Fortuna Funds](https://www.fortunafunds.com/hubfs/Logo_White_Version.svg)Homepage](https://www.fortunafunds.com) - [HBTC ETF](https://hbtc.fortunafunds.com/hbtc-fund/) - [Fund Documents](https://www.fortunafunds.com/resources) - [Meet the Team](https://www.fortunafunds.com/about-us) - [Insights](https://www.fortunafunds.com/insights) - [Privacy Policy](https://www.fortunafunds.com/privacypolicy) [INVEST](https://www.fortunafunds.com/#invest) - [HBTC ETF](https://hbtc.fortunafunds.com/hbtc-fund/) - [Fund Documents](https://www.fortunafunds.com/resources) - [Meet the Team](https://www.fortunafunds.com/about-us) - [Insights](https://www.fortunafunds.com/insights) - [Privacy Policy](https://www.fortunafunds.com/privacypolicy) [INVEST](https://www.fortunafunds.com/#invest) ![](https://www.fortunafunds.com/hs-fs/hubfs/Blog%20Images/Stack.png?width=1200&height=628&name=Stack.png) # The Options Recipe Behind HBTC's Strategy ![Mark Adams, CIO & Co-Founder, Fortuna Funds](https://7528315.fs1.hubspotusercontent-na1.net/hub/7528315/hubfs/raw_assets/public/mV0_d-cms-elevate-theme_hubspot/elevate/images/avatar-placeholder.jpg?width=48&height=48&name=avatar-placeholder.jpg) Mark Adams, CIO & Co-Founder, Fortuna Funds September 27, 2026 We talk a lot about the idea that you don't have to believe in Bitcoin to potentially benefit from it. We talk about winning by losing less. Those are the right headlines and catchy phrases designed for our audience to remember. This blog post is for the advisors who might be asked to explain *“how does it work?”* to clients. ## **Three Key Components** The strategy underlying the Fortuna Hedged Bitcoin ETF (HBTC) is built from three components, layered together every month. 1. **Long exposure to Bitcoin-related securities.** "Long" just means the Fund owns the position outright. The same directional bet as buying and holding. If Bitcoin-related securities rise in value, this piece of the portfolio rises with them, roughly dollar for dollar; if they fall, it falls right alongside them. HBTC gets this exposure principally through IBIT, iShares Bitcoin Trust, options, the spot Bitcoin ETF, rather than by holding the asset directly. This means that the Fund has no need to manage digital wallets, private keys, direct custody of Bitcoin and that the exposure moves through a listed, exchange-traded security instead, in a standard brokerage account. On its own, this component carries the full investment ride - both up and down - and has nothing softening the volatility in either direction 2. **A protective put on the long exposure.** HBTC buys outright put options on IBIT. A put option gives the Fund the right to sell at a set price, so if IBIT falls sharply, the put's value rises to help offset that loss. This is the leg doing the actual hedging work. 3. **A call spread, sold to help pay for the put.** Put options aren't free, and on an asset as volatile as Bitcoin, they can be quite expensive. To offset that cost, HBTC sells a call spread against the position. In exchange for collecting that premium, the Fund gives up some, but by design not all, of the upside above certain price levels. Put together, these positions create an "uncapped collar” where the Fund is long the underlying, long a put for protection, short a call spread to help fund it. An uncapped collar is a standard institutional options structure. What's specific to HBTC is that the managers are applying this strategy to Bitcoin each and every month. ## **Why Not Puts Alone?** This is often the first question we’re asked by curious investors or those familiar with options-trading strategies. Our response is that Bitcoin's implied volatility runs high, which means options premiums on it run high too. An outright put, bought and simply held, would be a legitimate hedge…but costly to carry month after month. When we shift to a put spread instead (buying a put and selling a lower-strike put against it) the cost might come down, but so does the protection: once Bitcoin falls through that lower strike, the spread stops paying out and losses resume from there. We believe this is the structural problem with buying protection on the cheap – it has a habit of running out right around the point it's needed most. So HBTC's approach is designed to keep the put outright - so the hedge doesn't have a floor where it quietly stops working - and finance it with a call spread on the other side instead of trimming the put itself. The tradeoff moves to the upside, where we believe giving up some gain is a more tolerable cost than a hedge that disappears mid-crisis. ## **Monthly Repositioning** Every month, the Fortuna portfolio management team rolls the position, because this is not a “set it and forget it” strategy. That roll is where the real judgment is necessary: - Where to set the put strike relative to Bitcoin's current price? - How wide to set the call spread given prevailing implied volatility? - How far above current prices should the call spread be positioned? Elevated volatility means richer premiums, which changes the math on both legs of the trade. (For example, a month where volatility has calmed down looks different from a month where it's spiking.) The point of repositioning HBTC on a fixed, systematic monthly cycle - rather than reactively - is to keep the process disciplined and repeatable. We believe this is preferable to making a series of one-off judgment calls, particularly under pressure. ## **The Trade-Off, Made Concrete** ![](https://play.vidyard.com/4gVheZVZDRFG8F53cWw4vn.jpg)   I walked through this trade-off directly in a recent video, using the kind of asymmetry the structure is built to produce: we're participating in most of the upside, but avoiding a considerable percentage of the downside. If Bitcoin is down 50% over the period we're holding this option strategy, HBTC would be down about 10%. If it's up 50%, HBTC would be up around 46%. This is what we mean when we say *“we win by losing less.”* *This is a hypothetical example and not necessarily the experience of the fund. The performance data quoted represents past performance and is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For standardized fund performance see the* [*fact sheet*](https://www.fortunafunds.com/hs/cta/wi/redirect?encryptedPayload=AVxigLKpHD%2B8Zy5X%2Ffc0e5PqI3BMTh5tAeEhMVrNA4q2CBMuOwTJENJbVyOtYcPeCk%2BNNL2Uzjgq4zgzx5GDd1HUziCRF7NXSO5WOoaHlExU8iKMLnIueU94lp26R11GI%2FIFZ%2B292miWhveUISCRGO6x6kqUnzt35xt%2Bmf6RmHyKTUnbEcKHnvQRnyKB3FKWEZ4F1txqPgOcqQRmYFqUWdWPYDJbmyEFFJky8sGHLOgN28LVOhvE&webInteractiveContentId=315713616619&portalId=243369569&hsLang=en)*.* Of course, this specific example is illustrative and meant to show the shape of the trade-off rather than a promised or guaranteed result. HBTC’s actual outcomes depend on where strikes are set, prevailing volatility, and timing, and they'll vary month to month. But the asymmetry it's pointing at (giving up some upside to avoid a disproportionate share of the downside) is the whole design goal of the structure detailed above. There's a related point I made in that same video that's easy to overlook: the right time to put a hedge on is before a drawdown, not after one. You really want to hedge your position when it's near a high, not necessarily after it's already fallen, because a hedge added after the fact only protects what's left. ## **The Bottom Line** HBTC employs three well-understood options positions, layered on top of Bitcoin-related securities, rebalanced on a disciplined monthly schedule, built specifically so the hedge doesn't quietly stop working at the moment it's needed most. There’s no secret sauce or black box - there is a clearly defined process. That's the entire recipe. If you want to walk through the mechanics in more detail, or see how the strikes have been set in a given month, reach out. We're always excited to get into the specifics. ## Share this post [mailto:https%3A%2F%2Fwww.fortunafunds.com%2Ffortuna-funds-blog%2Fthe-options-recipe-behind-hbtcs-strategy](mailto:https%3A%2F%2Fwww.fortunafunds.com%2Ffortuna-funds-blog%2Fthe-options-recipe-behind-hbtcs-strategy) ## Keep reading ### [![](https://www.fortunafunds.com/hs-fs/hubfs/Blog%20Images/Investor%20Type.png?width=1200&height=627&name=Investor%20Type.png) Discovering Your Investor Type: Where We Believe HBTC Fits Into a Portfolio You've Already Built](https://www.fortunafunds.com/fortuna-funds-blog/discovering-your-investor-typewhere-we-believe-hbtc-fits-into-a-portfolio-youve-already-built) ### [![](https://www.fortunafunds.com/hs-fs/hubfs/Blog%20Images/Lady%20Fortuna.png?width=1200&height=628&name=Lady%20Fortuna.png) Win by Losing Less? Why HBTC Was Built for Bitcoin’s Volatile Moments](https://www.fortunafunds.com/fortuna-funds-blog/win-by-losing-less-why-hbtc-was-built-for-bitcoins-volatile-moments) [Privacy Policy](https://www.fortunafunds.com/privacypolicy) · Legal · © 2025 Fortuna Funds. All rights reserved. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. Investors should carefully consider investment objectives, risks, charges, and expenses. This and other important information is contained in the [fund prospectus](https://fortunafunds.com/wp-content/uploads/2025/03/Fortuna-Hedged-Bitcoin-Fund-Prospectus.pdf) and [summary prospectus](https://fortunafunds.com/wp-content/uploads/2025/03/Fortuna-Hedged-Bitcoin-Fund-Summary-Prospectus.pdf), which should be read carefully before investing. All Fortuna trademarks mentioned are owned by Fortuna Funds, LLC. All other company and product names mentioned are the property of their respective companies. Use of this website is intended for U.S. residents only. Important Risk Information There can be no assurance that the fund will achieve its investment objective. **Bitcoin and Bitcoin-related securities are relatively new investments. They are subject to unique and substantial risks and historically have been subject to significant price volatility. The value of an investment in the Fund could decline significantly and without warning, including to $0. You should be prepared for the possibility of losing your entire investment. The performance of Bitcoin-related securities, and therefore the performance of the Fund, may differ significantly from the performance of Bitcoin.** **Bitcoin Exposure Risk.** The Fund seeks to have significant exposure to Bitcoin. As a result, the Fund’s performance may be disproportionately and significantly impacted by the poor performance of Bitcoin or events materially affecting the Bitcoin ecosystem. The Fund’s exposure to Bitcoin makes it more susceptible to any single occurrence affecting Bitcoin and may subject the Fund to greater market risk than more diversified funds. **Derivatives Risk.** The Fund will obtain exposure to Bitcoin through Bitcoin-related securities. The derivatives used by the Fund may give rise to a form of leverage, which magnifies the potential for gain and may result in greater losses. In some cases, this may cause the Fund to liquidate other portfolio investments at inopportune times. Certain of the Fund’s transactions in derivatives could also affect the amount, timing, and character of distributions to shareholders, which may result in the Fund realizing more short-term capital gain and ordinary income subject to tax at ordinary income tax rates than it would if it did not engage in such transactions. Such distributions may adversely impact the Fund’s after-tax returns. **Investors should consider the investment objectives, risks, charges, and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, visit our website at www.fortunafunds.com/hbtc-fund/. Read the prospectus or summary prospectus carefully before investing.** Foreside Fund Services, LLC, distributor. This content, developed by Fortuna Funds, LLC, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice. Fortuna Funds, LLC is an investment advisory firm registered with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940. SEC registration does not constitute an endorsement of the firm by the Commission, nor does it indicate that the adviser or investment adviser representative has attained a particular level of skill or ability. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Form ADV can be obtained by visiting [https://adviserinfo.sec.gov](https://adviserinfo.sec.gov/) and searching for our firm name. Neither the information contained herein, nor any opinion expressed, is to be construed as solicitation to buy or sell a security or personalized investment, tax, or legal advice.   ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Mark Adams, CIO & Co-Founder, Fortuna Funds", "url" : "https://www.fortunafunds.com/fortuna-funds-blog/author/mark-adams-cio-co-founder-fortuna-funds" }, "dateModified" : "2026-09-27T17:39:15.887Z", "datePublished" : "2026-09-27T17:39:15.000Z", "headline" : "The Options Recipe Behind HBTC's Strategy", "image" : [ "https://www.fortunafunds.com/hubfs/Blog%20Images/Stack.png" ], "mainEntityOfPage" : { "@id" : "https://www.fortunafunds.com/fortuna-funds-blog/the-options-recipe-behind-hbtcs-strategy", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://www.fortunafunds.com/hubfs/Logo_White_Version.svg" }, "name" : "Fortuna Funds" } } ```