Why use options Sell Put instead of $BTC DCA? It's not necessarily better to start earlier.

I tested this with real money for you—spot DCA followers' first pitfall with options
(Options Sell Put instead of DCA is definitely not better the earlier you start!)
1️⃣ Time Misconception:
Why is the 21-day expiration insurance more expensive than the one sold 42 days ago?
On June 19, selling the July 31 BTC 56,000 Put, option price was 1,014 U.
On June 26, selling the July 17 BTC 56,000 Put, option price was 1,285 U.
On June 26, selling the July 31 BTC 56,000 Put, option price was 1,875 U.
See that? The time got shorter, but the option price was still more expensive than what I sold earlier!
2️⃣ Why is this happening?
Core of option pricing: time decay & spot volatility
When selling a Put at 63,000, BTC had a full 7,000 USD safety cushion to 56,000. The whole market thought it was impossible to break, so premiums were discounted.
When BTC dropped to 59,800, the safety cushion instantly shrank to 3,800 USD. Buyers panicked, and premiums got violently recharged. In the face of a spot crash and IV explosion, time no longer matters as much.
My July 31 option was even bid up to 1,810 U on the order book, showing an unrealized paper loss of -78.59% in my account.
3️⃣ The most stupid method
"Selling Put too early instead of DCA":
Low capital efficiency: Your cash assets are locked in the exchange as collateral too early, missing the juicier premium range during the big drop.
Enduring unnecessary unrealized losses: Like me, you have to suffer big red paper losses along the way (although as long as you set aside 100% cash, you will never be liquidated midway, but it affects your mood).
Missing out on IV premium: They strike decisively only when BTC flash-crashes 10% in a day, panic spreads across the market, and IV skyrockets. Selling Put at that point not only lets you catch the bottom precisely but also score premiums multiplied several times due to extreme market panic.
📖Summary:
With spot DCA, you can blindly place orders; but with options Sell Put instead of DCA, you need to watch IV and time.
#Options