View on market
US spot Bitcoin ETFs saw inflows of $511.2 million over the past two days, indicating a potential Bitcoin trend change from the pivot of $53,700, though $66,000 remains a key challenge; traders who agree may want to use a Call Ratio strategy.
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 and anticipate a hurdle at around $66,000.
Trade Structure
(OTM Call) Buy 1x BTC-19JUL24-$64,000-C @ $363
(OTM Call) Sell 2x BTC-19JUL24-$66,000-C @ $174
Target: Spot level < $66,000
Payouts
Maximum Profit: $1,985/BTC
Net Debit of Strategy: $15/BTC
Why are we taking this trade?
On Tuesday, US spot Bitcoin ETFs saw inflows of $216.4 million, following $294.8 million on Monday (Source: Farside Investors).
In his speech, U.S. Federal Reserve Chair Jerome Powell stated that the U.S. economy is no longer overheated and that the labor market is “fully back in balance.”
From a technical perspective, Bitcoin bounced from lows around $53,700 and broke through short-term resistance levels, indicating a potential trend change. The recent inflows into US spot ETFs support this outlook. However, Bitcoin may face challenges trading above the $66,000 mark, which was the previous pivot point when the trend shifted. Traders looking to leverage 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 19th, traders will be at maximum profit from the strategy.
It’s important to note that while the initial debit of this strategy is $15, 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.
