This clever Bitcoin options strategy brings pro BTC traders big profits


The upcoming expiration of bitcoin (BTC) options on the 26th. March could be the biggest month ever at $6.1 billion. Less than 4 days before the settlement date, professional investors have already mapped out their strategies for the coming month.

Bitcoin price on Coinbase, USD. Source: TradingView

With the price of BTC already up 72.7% since February, most traders are skeptical that another rally will take place in the coming weeks. However, the $55,000 support was not available. The US has shown strength and is a signal that the upward trend has not changed.

Whales and arbitrage services are pretty bullish, as evidenced by premium futures and the ratio of long to short positions of key traders. The excitement seems more muted compared to mid-March, when the termly premium rose to 35% a year.

3-month basis for OKEx futures. Source: Crouch.

This clever Bitcoin options strategy brings pro BTC traders big profits

Option strategies are not liquidated before expiry

Option strategies provide excellent opportunities for traders who have a fixed target range for an asset. The use of leveraged futures contracts also allows traders to use leverage, although a stop loss reduces the profitability of the trade.

On the other hand, a trader can create a slightly bullish strategy by using multiple puts. The front spread with paths allows you to profit with no upfront costs other than margin requirements for negative price fluctuations. The same model can be used in both rising and falling conditions, depending on investors’ expectations.

It is important to remember that options have a fixed expiration date, so a price increase must occur within a certain period.

The bitcoin calendar options below are for the 30th. April, but this strategy can also be used for Ether options (ETH) or any other time frame. While costs vary, overall effectiveness should not be compromised.

Gain/Loss Measurement. Source: Derribit positioner

This clever Bitcoin options strategy brings pro BTC traders big profits

The proposed slightly bullish strategy is to buy 0.9 BTC worth $76,000 of puts and simultaneously sell 2.05 puts worth $64,000. To complete the transaction, you need to buy 1.31 BTC for $48,000 worth of put options.

It should be noted that these contracts are traded on the futures markets on a BTC basis. The above profit and loss figures are therefore expressed in satoshis (1/100,000,000 BTC) at maturity.

While this put option gives the buyer the right to sell the asset at a predetermined price, the seller agrees to buy it according to the contract. Put options can therefore also be used for UK neutral strategies.

This front spread with paths can produce a profit of $10,770.

As the above estimate shows, any result between $54,600 and $76,000 would be considered equivalent. Any result between $54,600 (down 4.3% from the current $57,050) and $76,000 (up 33.2%) is a net gain. (A 33.2% increase) means a net gain. For example, a 10% price increase to $62,750 results in a net gain of $9,350 or 0.149 BTC. At the same time, the maximum loss for this strategy would be $7,600 if the BTC were sold on the 30th. April stands at $48,000 (down 15.9%).

This entry spread with puts generates a potential profit of $10,770 on $64,000, or 2.85 times the loss if the price of BTC drops 10% to $51,350 on expiration day.

Trading multiple option strategies offers the best risk/reward ratio for bullish traders who want to bet on rising BTC prices. Moreover, apart from a margin requirement of 0.157 BTC to cover potential losses, no initial payment is required.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph. Every investment and every stage of trading involves risk. You should do your own research before making a decision.

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