---
title: "The HYPE Trade"
date: "2026-02-26"
excerpt: "My big bet for 2026."
tags: ["trading", "options", "crypto", "hyperliquid", "HYPE", "call-spread"]
---

## HYPE Thesis (Bullish)

I think we don't need to dive deep into the HYPE bullish thesis a lot, but:

<div class="hype-grid-list">

- Best perp dex (yet).
- HIP 4.
- Challenging Binance (which is shooting its own foot)
- ETF/DAT → Increasing investor base.
- 50% down from ATH. Price to earnings of 8. **Undervalued.**
- HyperEVM → Vaults, lending, DeFi. Value accrual.
- Bull market → Higher volume → Revenue → **Buyback & Burn**

</div>

## Macro/Market Thesis (Not Bullish)

Overall sentiment is not bullish.

<div class="hype-grid-list">

- Hurst Principle
- Second Presidential Year thesis
- Buffett indicator at 220%
- Hawkish Rate Cut
- Elliott Wave, C wave pullbacks

</div>

## Overall Trade Thesis

**Long HYPE, but limit downside.** If crypto goes up, \$HYPE & \$BTC will win. Need to hedge downside.

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## Trade Idea #1: Bull Call Spread (5x upside)

Bet on HYPE reaching its ATH, with fixed downside costs, no liquidation/funding risks. Effective 5x if HYPE reaches ATH (\$60).

**25th December 2026 expiry:**

- **Buy** 27 HYPE CE: Pay premium of **\$11**
- **Sell** 60 HYPE CE: Receive premium of **\$5**
- **Net pay**: **\$6** per HYPE (5x leverage)

|  | Value |
|--|-------|
| **Max Profit** | \$27 per HYPE |
| **Max Loss** | \$6 per HYPE |
| **Breakeven** | \$33 |

**Trade Payoff:** Long HYPE at \$33, with upside capped until \$60 (ATH of HYPE)

**Thesis:** Bet on HYPE reaching its ATH.

<!-- CHART_1 -->

<div class="hype-callout">

**Better than perps:** 5x leverage perp long requires similar (higher) cost, same max risk. But carries liquidation risk and costs \$2–3 per HYPE in funding costs (assume 10% funding).

</div>

<div class="hype-callout">

**Better than spot:** 5x leverage, frees up \$22 per HYPE to be used for USDC yield. Opportunity cost goes down. (5% yields \$1, 10% yields \$2). Net premium paid reduces to ~\$3, effectively long HYPE at \$30, max upside becomes \$30 (6x upside).

</div>

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## Trade Idea #2: Call Ratio Spread (Limiting all risks)

Limits further downside to \$1 per HYPE, exposes upside risk above \$92 (unlikely, and manageable over time).

**25th December 2026 expiry:**

- **Buy** 27 HYPE CE: Pay premium of **\$11**
- **Sell** 50 HYPE CE: Receive premium of **\$6**
- **Sell** 70 HYPE CE: Receive premium of **\$4**
- **Net pay**: **\$1** per HYPE

|  | Value |
|--|-------|
| **Max Profit** | \$22 per HYPE |
| **Max Loss (down)** | \$1 per HYPE |
| **Max Loss (up)** | Unlimited above \$92 |
| **Lower Breakeven** | \$28 |
| **Upper Breakeven** | \$92 |

**Trade Payoff:** Long HYPE at \$28, with upside capped until \$50.

**Thesis:** Pay only \$1 per HYPE.

<!-- CHART_2 -->

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<div class="hype-callout hype-callout-note">

I already entered Trade #1, and will be adding size over time on dips. I trade on **STS Digital's** client portal OTC.

</div>