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US spot Bitcoin ETFs reported $147.4 million in net inflows, contributing to a four-day positive streak and aiding Bitcoin’s recovery from last week’s drop. Technical analysis suggests Bitcoin has formed a short-term low, with the uptrend likely continuing at a slower pace, suggesting a Bull Call Spread strategy might be advantageous for traders.
Bull Call Spread
The proposed strategy is a Bull Call Spread. A Bull Call Spread consists of one long Call with a lower strike price and one short Call with a higher strike price. Both Calls have the same underlying and the same expiration date. It is established for a net debit (or net cost) and profits as the underlying price increases.
You may consider taking this trade if you expect the BTC price to increase.
Trade Structure
(OTM Call) Buy 1x BTC-19JUL24-$61,000-C @ $680
(OTM Call) Sell 1x BTC-19JUL24-$62,000-C @ $445
Target: Spot level > $62,000
Payouts
Maximum Profit: $765/BTC
Debit of Strategy: $235/BTC
Why are we taking this trade?
US spot Bitcoin ETFs have reported net inflows of $147.4 million on Wednesday, marking a four-day streak of positive gains. As highlighted in yesterday’s insights, Bitcoin has made a significant recovery from last week’s decline, bolstered by these ETF inflows (Source: Farside Investors).
From a technical perspective, the attached 4-hour BTC price chart indicates that Bitcoin has formed a short-term low. The recovery is evident as short-term resistance levels are being breached without notable retracements. This pattern suggests the potential establishment of a short-term low in BTC, with the uptrend likely to continue at a slower pace.
Therefore, traders might consider deploying a Bull Call Spread strategy to capitalize on this anticipated price movement based on the above analysis.
To implement this strategy, traders can buy a Call option at a lower strike price (e.g., $61,000) and simultaneously sell a Call option at a higher strike price (e.g., $62,000).
If BTC is at or above $62,000 when the options expire on July 17th, traders will achieve maximum profit from this strategy.
In case of a market downturn, the potential loss is limited to the initial debit of $235.
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.
