View on market
Tense tone for traders as Bitcoin ETF inflows signal continued weakness contributing to a sell-off that breached critical support levels.
In this bearish BTC market, here’s a trading approach of a short dated expiry strategy.
Put Ratio Spread
The proposed strategy is a Put Ratio Spread Strategy. A Put ratio spread involves buying a put option that is OTM, and then selling two (or more) of the same option type (Put) of the same expiry, further OTM.
You might consider executing this trade if your short-term outlook on BTC is bearish.
Trade Structure
(OTM Put) Buy 1x BTC-5APR24-$62,000-P @ $230
(OTM Put) Sell 2x BTC-5APR24-$60,000-P @ $110
Target: Spot level > $60,000
Payouts
Maximum Profit: $1,990/BTC
Debit of Strategy: $10/BTC
Why are we taking this trade?
In continuation of our analysis from yesterday’s trading setup, Bitcoin ETF inflows continue to exhibit weakness, further extending the ongoing market sell-off. Notably, critical support levels at $68,300 were breached, as illustrated in the attached chart. Additionally, the price has broken through the 4-hour demand zone situated at $66,300.
The next significant demand zone is in the range of $61,800 to $60,000. This zone holds major importance for the market dynamics, as it previously acted as a pivotal level, propelling Bitcoin to a high of $73,800. This demand zone may serve as a potential pause to the sell off in BTC, allowing participants to capitalize on gains from the suggested strategy.
Hence, traders can utilize a put ratio spread strategy in BTC for short-term bearish views and benefit from potential price declines amidst market volatility.
To execute this approach, traders can purchase a put option with a higher strike price (e.g., $62,000) while simultaneously selling double the quantity of puts at a lower strike price (e.g., $60,000).
If the Bitcoin price is at $60,000 when the options expire on April 5th, traders will achieve maximum profit from this strategy.
It’s important to note that while the initial debit of this strategy is $10, losses beyond the initial debit are possible due to the position’s net short put 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.
