View on market
In a bearish BTC market aiming for $62,000 to $61,000 levels, here’s a trading approach for short-term gains with brief expiry.
Put Butterfly Spread
The proposed strategy is a Put Butterfly Strategy. A Long Butterfly Spread with Puts is a three-part strategy that is created by buying one put at a higher strike price, selling two puts with a lower strike price and buying one put with an even lower strike price. All puts have the same expiration date, and the strike prices are equidistant.
You might consider strategizing this trade if your short-term outlook on BTC is bearish.
Trade Structure
(OTM Put) Buy 1x BTC-5APR24-63,000-P @ $450
(OTM Put) Sell 2x BTC-5APR24-61,000-P @ $225
(OTM Put) Buy 1x BTC-5APR24-59,000-P @ $120
Target: Spot level < $61,000
Payouts
Maximum Profit: $1880/BTC
Debit of Strategy: $120/BTC
Why are we taking this trade?
Bitcoin ETF inflows showed weakness on Monday, accompanying a market sell-off. Critical support levels at $68,300 were breached, alongside the price also broke through the 4-hour demand zone at $66,300. The next significant support zone is anticipated around $62,000-$61,000.
Hence, traders can utilize a put spread strategy in BTC for short-term bearish views to limit downside risk exposure while still benefiting from potential price declines, ensuring a structured approach to capital protection and profit potential amidst market volatility.
To execute this approach, traders can purchase a put option with a higher strike price (e.g., $63,000) while simultaneously selling double the quantity of puts at a lower strike price (e.g., $61,000) and buying a put at an even lower strike price (e.g., $59,000).
If the Bitcoin price is at $61,000 when the options expire on April 5th, traders will achieve maximum profit from this strategy.
In case of a market upturn, the potential loss is limited to the initial debit of $120.
How to take this trade on Deribit?
Step 1: Go to Combo books under the Strategy tab & Create combo.
Step 2: Click RFQ and send your order to the Combo List.
Step 3: Go to Combo list (BTC), click on your Strategy and execute.
Disclaimer
This report must not be used as a singular basis of any trading decision. The document includes analysis and views of our research team. The document is purely for information purposes and does not constitute trading recommendation/advice or an offer or solicitation of an offer to buy/sell any contract.
