View on market
Bitcoin Broke-Out of a symmetrical triangle pattern indicating bullish sentiment with a possibility of reaching new highs, making the call butterfly strategy appealing for traders.
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 your view is bullish on BTC prices.
Trade Structure
(OTM Call) Buy 1x BTC-12APR24-$76,000-C @ $445
(OTM Call) Sell 2x BTC-12APR24-$78,000-C @ $260
(OTM Call) Buy 1x BTC-12APR24-$80,000-C @ $135
Target: Spot level < $78,000
Payouts
Maximum Profit: $1,940/BTC
Debit of Strategy: $60/BTC
Why are we taking this trade?
Based on yesterday’s insights, Bitcoin experienced a breakout from the symmetrical triangle, as illustrated in the attached 4 hour BTC price chart. A notable follow-through was observed post-breakout, suggesting a bullish sentiment in the market. Our perspective remains optimistic regarding the bullish sentiments in the underlying. Additionally, we observed a significant increase in open interest(OI) at the $78,000 strike for the 12th April expiry. Considering these factors, there is a potential for Bitcoin to make new highs. Hence, traders anticipating upward movement in the coming days might find the call butterfly strategy advantageous.
To execute this approach, traders can purchase a call option with a higher strike price (e.g., $76,000) while simultaneously selling double the quantity of calls at a higher strike price (e.g., $78,000) and buying a call at an even higher strike price (e.g., $80,000).
If the Bitcoin price is at $78,000 when the options expire on April 12th, traders will achieve maximum profit from this strategy.
In case of a market downturn, the potential loss is limited to the initial debit of $60.
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.
