View on market
BTC is facing resistance from the $61,700 supply zone, with a potential move toward the $56,000 pivot level after a breach of the $57,000 demand zone. Further downside pressure may continue from higher time frame resistance.
Put Butterfly Strategy
The proposed strategy is a Put Butterfly strategy. A 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.
You can consider executing this strategy if you are eyeing downward movement in BTC prices.
Trade Structure
(OTM Put) Buy 1x BTC-18AUG24-$57,000-P @ $289
(OTM Put) Sell 2x BTC-18AUG24-$56,000-P @ $149.5
(OTM Put) Buy 1x BTC-18AUG24-$55,000-P @ $84
Target: Spot level = $56,000
Payouts
Maximum Profit: $926/BTC
Debit of Strategy: $74/BTC
Why are we taking this trade?
Based on the attached 2-hour price chart, Bitcoin (BTC) is currently encountering resistance within the supply zone at $61,700. We’ve noticed a breach in the demand zones on the lower time frame, as highlighted in the attached chart, where the demand zone around $57,000 was broken in yesterday’s session. Consequently, the price may continue to struggle against the resistance from the higher time frame supply zone, with a potential move towards the 56,000 pivot level.
Therefore, traders can consider deploying a Put Butterfly strategy to capitalize on the anticipated price movements.
To execute this approach, traders can purchase a Put option with a higher strike price (e.g., $57,000) while simultaneously selling double the quantity of Puts at a lower strike price (e.g., $56,000) and buying a Put at an even lower strike price (e.g., $55,000).
If the BTC price is at $56,000 when the options expire on August 18th, traders will achieve maximum profit from this strategy.
In case of a market upturn, the potential loss is limited to the initial debit of $74.
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.
