Coinbase Global (NASDAQ:COIN) has surged by almost 30% over the past week. The rally comes following the passage of the much-anticipated stablecoin regulation bill through the Senate, seen as a big positive for COIN, which counts stablecoins as its second-largest revenue driver (related: How Coinbase Benefits From Stablecoin Bill) In fact, COIN stock has fared pretty well over the last year as well, rising by roughly 60% since the election of Donald Trump to the Presidency. So, did you miss the surge? Don’t worry. There’s still a smart way to tap into Coinbase’s long-term growth potential – one that offers a built-in margin of safety and returns far better than cash or bonds. To be sure, Coin stock does look a bit overvalued at the moment. But what if you could get in at a 40% plus discount – say, at levels of about $180 or less a share? Now we’re talking.
If that price sounds like a bargain, and you’ve got some liquidity, here’s a clever trade to consider.
The Trade: 12% yield at 40% margin of safety, by selling Put Options
Coinbase stock is trading at about $310. You can sell a long-dated Put option expiring June 18, 2026, about a year away, with a strike price of $180, and collect roughly $1,515 in premium per contract (each contract represents 100 shares).
That’s an 8.5% yield on the $18,000 you’re setting aside for the possibility of buying the stock in just 12 months. Plus, don’t forget, this cash parked in a savings or money market account will earn an extra 4% per annum. So we’re talking a 12% plus yield overall.
And here’s the kicker. You’re agreeing to buy Coinbase stock at $180, a roughly 40% discount to the current market price, only if the stock drops below that level by the expiration date. The strategy is reliable because large institutions have tested the strategy at scale, and for the right long-term investors, it may serve just right. As an aside, market leadership is in fact one of the factors we consider in constructing the market-beating Trefis High Quality portfolio (HQ) – a strategy of 30 stocks that targets long-term value creation. HQ has outperformed the S&P 500 and achieved returns greater than 91% since inception.
Sure, I see the 12.5% return. But what if COIN drops more than 40%? Isn’t there some risk?
Of course, there is risk. Because there are two ways this could unfold:
- COIN stays above $180 on June 18, 2026: You keep the full $1,515 premium. That’s 8.5% extra income over the next roughly one year on cash that might otherwise earn you 4% or less. You never buy the stock and simply walk away with the cash.
- COIN ends up below $180: You’ll be obligated to buy 100 shares at $180. But thanks to the $1,515 premium, your effective cost basis is just $164.85 per share – a roughly 47% discount from today’s level. Circle, another high-flying crypto stock, could also see similar drawdowns: Can Circle Stock Drop 80%?
In short, you win either way, especially if you’re comfortable owning a high-potential company like COIN for the long haul.
Is that a good deal, though?
It could very well be, if you consider a couple of facts:
If you do end up owning COIN stock, you’re not stuck with some speculative stock. You’re holding a company that is:
- A key player in the crypto space: Coin is the largest U.S.-listed crypto exchange and custody platform, serving retail and institutional clients globally. It also benefits from stablecoin growth through its partnership with Circle, earning interest income from USD Coin reserves. Related: Will Visa and Mastercard Survive Stablecoin Onslaught?
- Fast growing: COIN grew sales by almost 2x over 2024 as the crypto market upcycle began. While growth is projected to cool this year, it should expand much faster than the S&P 500 median of <5%. See How Circle Can 3x Its Revenues
And The Risk of a Crash Is Lower Than You Think
Selling puts is only as good as the business you’re willing to own. While Coinbase stock has run up a lot in recent months, its fundamentals are good
- Over $8 billion in cash and cash equivalents as of the end of Q1 2025
- Net profits stood at almost $2.6 billion last year, with net margins coming in at 40%.
- The stock trades at about 39x estimated FY’26 earnings. While this is rich, this is not unusual for high-growth companies in hot sectors such as crypto.
The Bottom Line – Margin of Safety
This trade offers an asymmetric risk-reward setup, with a built-in 40% plus discount.
- If the stock drops, you’ll own Coinbase at about $165 effectively. That’s just around the lows the stock witnessed in 2024. You won’t mind holding this quality name for a few years, or until it grows to $250 levels or more, if you’re an investor with a long-term mindset.
- And if it doesn’t? You walk away with a roughly 12% plus yield (8.5% on the options sold + 4% on the cash set aside)
Either way, you come out ahead.
These are the kinds of margin-of-safety setups and asymmetric risk-reward tradeoffs that we seek in the Trefis HQ portfolio, which is focused on long-term value creation. With a collection of 30 stocks, it has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.