View on market
Following breach of the distal line of Flip Zone, BTC experienced minor retracements, indicating slow-paced rally amid an overhead supply zone, which could serve as a crucial level to drag prices down, hence traders can look to deploy a call ratio spread strategy.
Call Ratio Spread
The proposed strategy is a Call Ratio Spread. A Call ratio spread involves buying a call option that is OTM, and then selling two (or more) of the same option type (Call) of the same expiry, further OTM.
You may consider taking this trade if your perspective aligns with a sideways to bullish outlook on BTC.
Trade Structure
(OTM Call) Buy 1x BTC-10MAY24-$66,000-C @ $97
(OTM Call) Sell 2x BTC-10MAY24-$67,000-C @ $46
Target: Spot level < $67,000
Payouts
Maximum Profit: $995/BTC
Net Debit of Strategy: $5/BTC
Why are we taking this trade?
As illustrated in the attached 4-hour price chart of BTC, we observe some retracements following the breach of the distal line of the flip zone. While these retracements are not particularly significant, it suggests that prices may attempt a rally, albeit at a slower pace due to another overhead supply zone on the price charts. This supply zone holds significance as it gave a low of $56,500 to BTC, potentially acting as a crucial level to push prices below this pivotal point. Traders looking to capitalize on this analysis could consider implementing a call ratio spread strategy.
To implement this strategy, traders can buy a higher strike call option (e.g., $66,000) and simultaneously sell calls in double quantity (2x) of a higher strike price (e.g., $67,000).
If Bitcoin is at $67,000 when the options expire on May 10, traders will be at maximum profit from the strategy.
It’s important to note that while the initial debit of this strategy is $5, 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.
