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Capitalizing on high Open Interest and approaching resistance, traders can use the bear call spread strategy for the current market.
Bear Call Spread
The proposed strategy is a Bear Call Spread. A bear call spread is achieved by simultaneously selling a call option and buying a call option at a higher strike price but with the same expiration date.
You might consider initiating this trade if you believe that BTC can face resistance from the overhead Resistance zone.
Trade Structure
(OTM Call) Sell 1x BTC-26APR24-$70,000-C @ $730
(OTM Call) Buy 1x BTC-26APR24-$71,000-C @ $545
Target: Spot level < $70,000
Payouts
Maximum Profit: $185/BTC
Why are we taking this trade?
BTC experienced some pullbacks after reaching a low of around $59,650, bouncing back from the 4-hour demand zone following several tests of this zone. Currently, there’s a strong overhead supply zone or resistance near $66,600, which could pose a significant challenge for BTC’s upward movement. Moreover, there’s a high Open Interest (OI) at the $70,000 strike for the 26th April expiry.
To take advantage of this increase in Open Interest and with the price approaching the resistance area, the bear call spread strategy stands out as an appealing strategy.
To execute this strategy, traders can sell a call option of a higher strike price, such as $70,000, while simultaneously purchasing a call option at an even higher strike price, like $71,000.
In case of market upturn, the maxim loss is limited to $815 , Maximum loss of Bear Call spread = Difference between strike prices of calls ($71,000 – $70,000) – Net Credit ($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.
