View on market
US spot Bitcoin ETFs saw $130 million in net inflows, the largest in three weeks, with July’s seasonality historically boosting Bitcoin. Technical analysis suggests a potential Bitcoin rally, though resistance around $66,000 remains significant.
Call Ratio Spread
The proposed strategy is a Call Ratio Spread. A Call Ratio Spread involves buying a Call option that is OTM, and then selling two (or more) of the same option type (Call) of the same expiry, further OTM.
You may consider taking this trade if you have a bullish outlook on BTC, but think the $66,000 resistance will hold for now.
Trade Structure
(OTM Call) Buy 1x BTC-12JUL24-$64,000-C @ $987
(OTM Call) Sell 2x BTC-12JUL24-$66,000-C @ $489.5
Target: Spot level < $66,000
Payouts
Maximum Profit: $1,992/BTC
Net Debit of Strategy: $8/BTC
Why are we taking this trade?
US spot Bitcoin ETFs have reported $130 million in net inflows, marking the largest influx in three weeks. (Source: Farside Investors)
July’s positive seasonality could be significant for crypto investors, as Bitcoin has historically shown stronger performance during this month. Meanwhile, today, Federal Reserve Chairman Powell is set to give a speech, and we are anticipating new unemployment data this Friday. A weaker-than-expected report could reignite hopes for rate cuts.
Source: Coinglass
From a technical standpoint, as shown in the attached 4-hour BTC price chart, Bitcoin has broken out of a trend line (indicated by the white line) with no major retracements observed. This suggests the possibility of a rally in Bitcoin, and traders can expect the bullish environment to persist. On the upside, BTC may face resistance around $66,000, which was a crucial support level broken on June 14, leading to a significant sell-off. This level can be important in resisting upward price movement.
Traders looking to capitalize on this analysis might consider implementing a Call Ratio Spread strategy.
To implement this strategy, traders can buy a higher strike Call option (e.g., $64,000) and simultaneously sell Calls in double quantity (2x) of a higher strike price (e.g., $66,000).
If Bitcoin is at $66,000 when the options expire on July 12th, traders will be at maximum profit from the strategy.
It’s important to note that while the initial debit of this strategy is $8, losses beyond the initial debit are possible due to the position’s net short call exposure.
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.
