View on market
BTC is encountering resistance at $60,000, with another supply zone at $62,000. This selling pressure is likely to prevent prices from rising, particularly as the options market suggests difficulty in moving higher before the September 13th expiry.
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 hurdles in crossing the $62,000 supply zone.
Trade Structure
(OTM Call) Sell 1x BTC-13SEP24-$62,000-C @ $842
(OTM Call) Buy 1x BTC-13SEP24-$63,000-C @ $615
Target: Spot level < $62,000
Payouts
Maximum Profit: $227/BTC
Why are we taking this trade?
After examining the 4-hour price chart of BTC, we observed that although Bitcoin showed some bounces after breaching the support level at $57,700, it struggled to break through the resistance pivots at $60,000. There’s another supply zone at $62,000, as highlighted in the attached chart. This supply zone shifted the trend, confirming lower highs after the formation of a base, followed by selling pressure that resulted in the formation of bearish candles.
Therefore, I anticipate that BTC will face upward resistance due to this supply zone. Additionally, analyzing the BTC options metrics for the September 13th expiry, the maximum pain level is at $60,000, suggesting that the price may struggle to trade higher and could hover near this level. (Source: Deribit Options Metrics).
Therefore, traders can capitalize on this outlook on BTC using a Bear Call Spread strategy. To execute this strategy, traders can sell a call option of a higher strike price, eg. $62,000 while simultaneously purchasing a call option at an even higher strike price, like $63,000.
In case of market upturn, the maximum loss is limited to $773. Maximum loss of Bear Call Spread = Difference between strike prices of calls ($63,000 – $62,000) – Net credit ($227).
How to take this trade on Deribit?
Step 1: Go to the “Combo Books” page, which can be found in the top menu under “Strategy”.
Step 2: Go to the “Create Combo” tab, and enter the details for the desired combo. At this stage you’re just creating the order book for the combo, so you don’t need to worry about the direction.
Step 3: Click “Create and RFQ”, and then click “Confirm”, to create an order book for the combo.
Step 4: Go to the “Combo List (BTC)” tab, click on the desired combo to open the order book.
Step 5: Enter your order details and execute. Depending on the direction of the trade, you may need to either buy or sell the combo. The direction of each leg is displayed under the Buy and Sell buttons.
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.
