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BTC dropped to our highlighted demand zone, rebounding from there and aligning with a key Fibonacci level. Traders expecting upward movement might consider the call butterfly strategy.
Call Butterfly Spread
The proposed strategy is a Call Butterfly Strategy. A Butterfly spread with calls is a three-part strategy that is created by buying one call at a lower strike price, selling two calls with a higher strike price and buying one call with an even higher strike price.
You can consider executing this strategy if you are eyeing upward movement in BTC prices.
Trade Structure
(OTM Call) Buy 1x BTC-19APR24-$71,000-C @ $455
(OTM Call) Sell 2x BTC-19APR24-$73,000-C @ $255
(OTM Call) Buy 1x BTC-19APR24-$75,000-C @ $170
Target: Spot level < $73,000
Payouts
Maximum Profit: $1,885/BTC
Debit of Strategy: $115/BTC
Why are we taking this trade?
As mentioned in our latest insights, Bitcoin experienced a sell-off down to the demand zone we previously highlighted. This zone played a crucial role in driving prices up to a peak of $73,800. Additionally, this level aligned with the 23.6% Fibonacci retracement level, measured from the recent highs to the lows of March 19.
After reaching this demand zone, as shown in the attached 4H BTC charts, we’ve noticed a significant rebound. This suggests that we could see some more retracement in the market soon.
For traders expecting an upward move in the days ahead, the call butterfly strategy could be a beneficial approach to consider.
To execute this approach, traders can purchase a call option with a higher strike price (e.g., $71,000) while simultaneously selling double the quantity of calls at a higher strike price (e.g., $73,000) and buying a call at an even higher strike price (e.g., $75,000).
If the Bitcoin price is at $73,000 when the options expire on April 19th, traders will achieve maximum profit from this strategy.
In case of a market downturn, the potential loss is limited to the initial debit of $115.
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.
