Recent weeks have witnessed a significant surge in the stock price of Coinbase Global, Inc. (COIN), driven by two major catalysts: its inclusion in the S&P 500 index and a strategic acquisition aimed at expanding its derivatives offerings. For traders and investors looking to position themselves around this momentum, structured options strategies can offer a balanced approach to capturing potential upside while managing risk.
This analysis breaks down the factors behind Coinbase's recent performance and presents two actionable options spread strategies for those with a neutral to bullish outlook on the stock.
Understanding Coinbase's Recent Surge
On May 13, Coinbase's stock price soared nearly 24% following the announcement that it would be added to the S&P 500 index. This milestone is not just symbolic; it signifies the exchange’s maturation into a mainstream financial institution. Inclusion in major indices typically attracts significant inflows from passive funds and institutional investors, providing a structural tailwind for the stock.
Beyond index inclusion, Coinbase has also made a bold move to expand its global footprint. The company announced plans to acquire Deribit, a Dubai-based cryptocurrency derivatives exchange, for approximately $2.9 billion. If completed, this would be one of the largest acquisitions in the crypto sector to date, substantially broadening Coinbase’s product offerings and geographic reach.
Year-to-date, as of late May, Coinbase's stock is up approximately 85% from its 2025 lows, reflecting renewed investor confidence.
The Bitcoin Bull Market and Revenue Optimism
Coinbase’s fortunes are closely tied to the broader cryptocurrency market, particularly Bitcoin. Recently, Bitcoin achieved a new all-time high, surpassing $111,000. This bullish momentum directly benefits Coinbase, as increased trading activity typically leads to higher transaction revenues for the exchange.
The company’s Q1 2025 earnings report revealed that it holds approximately $1.3 billion in cryptocurrencies, with Bitcoin making up a significant portion. This holding acts as an additional lever; as crypto asset prices appreciate, so does the value of Coinbase’s corporate treasury.
Positive regulatory developments have also contributed to the optimistic outlook. Progress on stablecoin legislation in the U.S. Senate, for example, has been viewed as a constructive step toward clearer industry rules, reducing a key uncertainty for major players like Coinbase.
Technical indicators further support a positive near-term view. Analysis based on moving averages currently flags COIN stock with a strong "Buy" signal.
Implementing Options Strategies for COIN
For those who believe the current positive trends for Coinbase have further to run—but also want to define their risk—options spreads can be an effective tool. Below are two strategies using options expiring in June 2025, designed for a neutral to bullish stance.
1. Bull Call Spread
A bull call spread is a debit strategy used when you expect moderate price appreciation. It involves buying a call option at a specific strike price while simultaneously selling another call option at a higher strike price.
Structure for COIN (June 20, 2025 Expiration):
- Buy one COIN June 20, 2025, $265 Call @ $17.75
- Sell one COIN June 20, 2025, $270 Call @ $15.65
This creates a net debit of $2.10 per share, or $210 per contract spread.
Key Metrics:
- Maximum Profit: $290 per spread. This is achieved if COIN is at or above $270 at expiration. It is calculated as the difference between the strike prices ($5.00) minus the net debit paid ($2.10).
- Maximum Loss: $210 per spread. This is limited to the net debit paid and occurs if COIN is at or below $265 at expiration.
- Breakeven Point: $267.10 at expiration. This is the lower strike price ($265) plus the net debit ($2.10).
Strategy Rationale:
This spread targets a move toward analyst price targets near $268. It capitalizes on the upward momentum in COIN, which has been fueled in part by Bitcoin's 28% rally since April 2025. The defined risk and lower cost of entry compared to buying a call outright make it an attractive strategy for capturing expected, but not explosive, gains.
2. Bull Put Spread
A bull put spread is a credit strategy used when you believe the price of the underlying asset will stay above a certain level. It involves selling a put option at a higher strike price and buying a put option at a lower strike price.
Structure for COIN (May 30, 2025 Expiration):
- Sell one COIN May 30, 2025, $260 Put @ $6.65
- Buy one COIN May 30, 2025, $255 Put @ $4.75
This creates a net credit of $1.90 per share, or $190 per contract spread.
Key Metrics:
- Maximum Profit: $190 per spread. This is the net credit received and is kept if COIN is at or above $260 at expiration.
- Maximum Loss: $310 per spread. This occurs if COIN is at or below $255 at expiration. The loss is the difference between the strikes ($5.00) minus the credit received ($1.90).
- Breakeven Point: $258.10 at expiration. This is the higher strike price ($260) minus the net credit received ($1.90).
Strategy Rationale:
This strategy profits if COIN simply remains above $260, a level it has recently surpassed. It leverages high short interest in the stock (around 13%) and benefits from time decay (theta), as the sold put option loses value as expiration approaches, provided the price stays stable or rises. This is an ideal strategy for generating income in a sideways or gently rising market.
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Important Risk Factors to Consider
While the outlook appears bright, investors must be aware of significant risks. Coinbase recently disclosed a data breach where an anonymous threat actor obtained some customer account information and internal documents. The company expects to incur between $180 million and $400 million in expenses related to customer remediation and potential penalties.
This event highlights the ongoing operational and security challenges facing digital asset platforms. Such incidents can damage customer trust and lead to regulatory scrutiny, potentially impacting the stock price negatively.
All investment and trading decisions should be based on your own research and risk tolerance. Options trading involves substantial risk and is not suitable for all investors.
Frequently Asked Questions
What is a bull call spread?
A bull call spread is an options strategy that involves buying a call option and selling another call option with a higher strike price but the same expiration. It is used when an investor expects a moderate rise in the asset's price. The strategy defines both maximum profit and maximum loss upfront, making it a popular choice for managing risk.
How does inclusion in the S&P 500 affect a stock like Coinbase?
Inclusion in the S&P 500 validates a company's size and stability, often leading to increased demand for its shares. This is because countless index funds and ETFs that track the S&P 500 are required to buy the stock, creating a consistent source of buying pressure. This can provide a durable boost to the stock's liquidity and valuation.
Why use options spreads instead of just buying stock?
Options spreads allow traders to define their maximum risk and often require less capital upfront than buying shares outright. They can be tailored to specific market forecasts, whether bullish, bearish, or neutral. For instance, a bull put spread can generate income even if the stock price only moves sideways, which buying stock cannot do.
What is the main risk of the bull put spread strategy?
The primary risk of a bull put spread is that the stock price falls below the higher strike price you sold. If it falls below your lower strike price, you incur the maximum loss, which is the difference between the two strikes minus the premium you received. It is crucial to only sell puts on stocks you wouldn't mind owning at the strike price.
How does Bitcoin's price affect Coinbase?
Coinbase's revenue is heavily correlated with cryptocurrency trading volumes. When Bitcoin's price is rising or highly volatile, trading activity on the exchange typically increases, leading to higher transaction fees for Coinbase. Additionally, the company holds a significant amount of crypto on its balance sheet, so its value appreciates directly with the market.
What does a high short interest mean for COIN?
A short interest of around 13% indicates a significant number of investors are betting the stock will decline. While this can create downward pressure, it also sets up the potential for a "short squeeze." If positive news causes the price to rise, short sellers may be forced to buy back shares to cover their positions, accelerating the upward move.