View on market
Bitcoin suggests a potential breakout from a symmetrical triangle pattern, while the record minting of stablecoins adds to traders’ anticipation of a bullish market environment.
Call Butterfly Spread
The proposed strategy is a Call Butterfly Strategy. A Butterfly spread with calls is a three-part strategy that is created by buying one call at a lower strike price, selling two calls with a higher strike price and buying one call with an even higher strike price.
You might consider executing this trade if your view is bullish on BTC prices on the short-term basis.
Trade Structure
(OTM Call) Buy 1x BTC-12APR24-$73,000-C @ $1020
(OTM Call) Sell 2x BTC-12APR24-$74,000-C @ $800
(OTM Call) Buy 1x BTC-12APR24-$75,000-C @ $640
Target: Spot level < $74,000
Payouts
Maximum Profit: $940/BTC
Debit of Strategy: $60/BTC
Why are we taking this trade?
Bitcoin is currently adhering to a symmetrical triangle pattern on the 4-hour chart, as depicted in the attached BTC price chart. It recently reached the upper trend line without encountering significant retracements, indicating a bullish environment in the market. Additionally, examining stablecoin issuances which is a major driver for Crypto space, we’ve observed record minting. This suggests a rapid movement of fiat money into the crypto. Given these factors, there’s a possibility of Bitcoin breaking from the symmetrical triangle pattern to the upside. Therefore, traders anticipating upward movement in the coming days may find the call butterfly strategy beneficial.
To execute this approach, traders can purchase a call option with a higher strike price (e.g., $73,000) while simultaneously selling double the quantity of calls at a higher strike price (e.g., $74,000) and buying a call at an even higher strike price (e.g., $75,000).
If the Bitcoin price is at $74,000 when the options expire on April 12th, traders will achieve maximum profit from this strategy.
In case of a market downturn, the potential loss is limited to the initial debit of $60.
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.
