This option strategy targets BTC at $ 50,000 without the risk of liquidation
2 min readBulls with their long options are still betting on BTC growth, but they too must admit that expectations above $ 60,000 are exaggerated. Many traders still added through futures contracts long positions.
Options are a safe bet to avoid liquidation
Call and put options markets provide more flexibility in developing your own strategies. Traders can also sell derivatives and create an unlimited negative exposure, similar to a futures contract.
This long strategy was set for the expiration date of September 21 and uses a slightly upward range. The same basic structure can be applied to bearish expectations. However, we will assume that most traders are looking for a positive development.
At the time of pricing, BTC was trading at $ 37,830, but a similar result can be obtained from any price level.
The first store requires purchase 1.2 BTC worth $ 42,000 of call options to create a positive exposure above this price level. Then, in order for the trader to limit profits above $ 46,000, he must sell 1.1 BTC call contracts worth $ 46,000.
To complete the strategy, the trader needs to sell a 1.3 BTC contract for a call of $ 56,000. This limits profits above this price level. Then a call is needed to protect against the $ 60,000 cap for $ 1.22 to limit losses if BTC it flies out unexpectedly.
In this situation, the profit far exceeds the loss of BTC
The implementation of the strategy may sound complicated, but the required margin is only 0.0265 BTC, which is also the maximum loss. Potential net income arises when Bitcoin trade between $ 42,950 (up 13.5%) and $ 59,450 (up 57%).
Traders should keep in mind that it is also possible to close a position before the expiry of 21 September if sufficient liquidity is available. The maximum profit is between $ 46,000 – $ 56,000 at 0.0775 BTC, almost three times the potential loss.
As more than 50 days remain until the expiry date, there is no risk of liquidation as in futures trading. Another positive is that most derivatives exchanges accept orders as low as 0.10 BTC contracts. This means that a trader could build the same strategy using a much smaller amount.
