View on market
The crypto market is bullish, with U.S. Spot Bitcoin ETFs seeing record inflows and Bitcoin poised for new highs after a technical breakout. Meanwhile, the European Central Bank and the Bank of Canada have cut interest rates, signaling a shift in monetary policy amidst persistent inflation.
Bull Call Ladder
The proposed strategy is a Bull Call Ladder. It involves buying a Call option that is OTM, and then selling two different higher strike OTM Call options.
You may consider taking this trade if you have a bullish outlook on BTC and eyes for new highs.
Trade Structure
(OTM Call) Buy 1x BTC-28JUN24-$80,000-C @ $975
(OTM Call) Sell 1x BTC-28JUN24-$85,000-C @ $408
(OTM Call) Sell 1x BTC-28JUN24-$90,000-C @ $185
Target: Spot level > $85,000 and <$90,000
Payouts
Maximum Profit: $4,618/BTC
Net Debit of Strategy: $382/BTC
Why are we taking this trade?
As mentioned in my recent insights, the crypto market is continuing its bullish trend, which is clearly reflected in the growing inflows into Spot Bitcoin ETFs. On June 6, U.S. Spot Bitcoin ETFs saw a total daily net inflow of $217.7 million, marking a record-breaking 18-day streak of net inflows (Source: Farside Investors).
Additionally, the European Central Bank has cut interest rates for the first time since 2019, despite ongoing inflationary pressures in the 20-nation eurozone. This reduction takes the central bank’s key rate to 3.75%, down from the record 4% set in September 2023. Canada also became the first G7 nation to cut interest rates in the current cycle, with the Bank of Canada lowering its overnight rate by 25 basis points to 4.75% on Wednesday. Sweden and Switzerland’s central banks have also announced their own rate reductions this year.
From a technical standpoint, as shown in the attached 4-hour BTC price chart, Bitcoin has broken out of a triangle pattern (as indicated by the yellow line) and is maintaining close proximity to the $71,300 mark, a crucial pivot point. No major retracements have been observed, suggesting the possibility of a rally in Bitcoin to new highs. Traders can expect the bullish environment to persist, with high open interest observed in the $80,000 and $85,000 strikes for the June 28 expiry. Those looking to capitalize on this analysis might consider implementing a Bull Call Ladder Spread strategy.
To implement this strategy, traders can buy a higher strike Call option (e.g., $80,000) and simultaneously sell Calls of higher strike price, (e.g., $85,000) followed by (eg., $90,000).
If Bitcoin price is between $85,000 and $90,000 when the options expire on June 28th, traders will be at maximum profit from the strategy.
It’s important to note that while the initial debit of this strategy is $382, 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.
