View on market
Investors are NOT buying the dip, ETF flows aren’t inspiring, downtrend in BTC prices may continue further, here’s a trading approach for Traders eyeing further weakness in BTC.
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.
If you see further weakness in BTC prices,, it might be worth considering execution of the below strategy.
Trade Structure
(OTM Put) Buy 1x BTC-26APR24-$52,000-P @ $255
(OTM Put) Sell 2x BTC-26APR24-$50,000-P @ $170
(OTM Put) Buy 1x BTC-26APR24-$48,000-P @ $115
Target: Spot level > $50,000
Payouts
Maximum Profit: $1,970/BTC
Debit of Strategy: $30/BTC
Why are we taking this trade?
In continuation to yesterday’s insight, BTC is showing signs of weakness. The response from the 4H demand zone has been lackluster, with dwindling flows into BTC ETFs. This lack of interest from investors persists even as BTC prices dip, indicating that investors are hesitant to buy into the market downturn. The ongoing decline in BTC ETF inflows is not instilling confidence among traders, further aiding the market’s weakness. Hence, traders can utilize a put butterfly strategy in BTC for bearish views.
To execute this approach, traders can purchase a put option with a higher strike price (e.g., $52,000) while simultaneously selling double the quantity of puts at a lower strike price (e.g., $50,000) and buying a put at an even lower strike price (e.g., $48,000).
If Bitcoin is at $50,000 when the options expire on April 26th, traders will be at maximum profit from the strategy.
In case of a market upturn, the potential loss is limited to the initial debit of $30.
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.
