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BTC hit $65,000 after an ascending triangle breakout but is facing resistance; it may retrace to $62,000, aligning with the options expiry’s maximum pain level.
Bear Put Spread
The proposed strategy is a Bear Put Spread. A Bear Put Spread is achieved by simultaneously buying a Put option and selling a Put option at a lower strike price but with the same expiration date.
You might consider initiating this trade if you feel BTC can drag down to the area responsible for breakout from the ascending triangle pattern.
Trade Structure
(OTM Put) Buy 1x BTC-30AUG24-$62,500-P @ $815
(OTM Put) Sell 1x BTC-30AUG24-$62,000-P @ $630
Target: Spot level < $62,000
Payouts
Maximum Profit: $315/BTC
Debit of Strategy : $185/BTC
Why are we taking this trade?
In my recent insights, I highlighted that after BTC broke out of the ascending triangle pattern, it surged to a high of $65,000, hitting a key resistance zone. We’re now observing some pullbacks from these resistance levels. I expect a potential downside movement as the supply zone might drive the price back to the breakout area. On the 1-hour BTC chart, there’s a rally-base-rally structure with the base forming around the $62,000 level, which seems to be the key breakout point. This suggests that the price could revisit this zone.
Moreover, when analyzing BTC options metrics for the August 30th expiry, the maximum pain level is identified at $62,000, indicating that the price might re-visit towards this level as the expiry approaches. (Source: Deribit Options Metrics).
Hence, traders might consider deploying a Bear Put Spread strategy to capitalize on the anticipated price movement.
To execute this strategy, traders can buy a Put option of a lower strike price, eg. $62,500 while simultaneously selling a Put option of an even lower strike price, like $62,000.
If BTC prices are at or below $62,000, when the options expire on August 30th, traders will achieve maximum profit from this strategy.
In case of market upturn, the maximum loss is limited to the initial debit of $185.
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.
