View on market
BTC broke out to $65,000 as anticipated, but may trade sideways near this pivot due to a supply zone, with options metrics indicating a potential hover around $61,000.
Bear Call Spread
The proposed strategy is a Bear Call Spread. A Bear Call Spread is achieved by simultaneously selling a call option and buying a call option at a higher strike price but with the same expiration date.
You might consider initiating this trade if you believe that BTC can face hurdles in crossing the $65,000 pivots.
Trade Structure
(OTM Call) Sell 1x BTC-30AUG24-$65,000-C @ $800
(OTM Call) Buy 1x BTC-30AUG24-$65,500-C @ $622
Target: Spot level < $65,000
Payouts
Maximum Profit: $178/BTC
Why are we taking this trade?
As highlighted in my insight on August 23rd, BTC broke out to the upside after forming higher highs and higher lows, and reached a peak of $65,000. This was expected due to the resistance pivot at that level, and also mentioned in the insight that Btc may face a hurdle at the next resistance level of $65,000. I foresee a potential sideways to downside movement from this pivot point, as the supply zone may cause the price to retrace to the zone responsible for the breakout from the ascending triangle pattern mentioned previously.
Additionally, analyzing the BTC options metrics for the August 30th expiry, the maximum pain level is at $61,000, suggesting that the price may hover close to this point. (Source: Deribit Options Metrics).
Therefore, traders can capitalize on this outlook on BTC using a Bear Call Spread strategy.
To execute this strategy, traders can sell a call option of a higher strike price, eg. $65,000 while simultaneously purchasing a call option at an even higher strike price, like $65,500.
In case of market upturn, the maximum loss is limited to $322. Maximum loss of Bear Call Spread = Difference between strike prices of calls ($65,500 – $65,000) – Net credit ($178).
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.
