The upcoming Bitcoin (BTC) expiration date on March 26 could be the largest ever with an open interest of $ 6.1 billion. Less than 4 days before the settlement date, professional investors will already be preparing strategies for the next month.
With Bitcoin already up by 72.7% since February, most traders are skeptical about a new high in the next few weeks. However, support at $ 55,000 has shown strength and is a sign that the trend will continue.
The arbitrage and whale scales are somewhat optimistic, which is reflected in the excellent contract premium and long / short ratio for the top traders. The tension appears to be calmer compared to mid-March, when the futures premium hit 35% year-over-year.
Option strategies are not subject to liquidation before expiration
Alternative strategies provide good opportunities for traders who have a consistent target for the asset. Using futures contracts delivered also allows traders to profit from a position even if the stop loss reduces the viability of the trade.
On the other hand, a trader can create a slightly bullish strategy by using multiple put options. The forward spread provides the club profit with no upfront costs, plus a margin requirement in the event of negative price fluctuations. The same pattern can be used in both bullish and bearish situations, depending on the investor’s expectations.
It is important to remember that options have a specific expiration date; Therefore, the price increase must occur within a period.
The Bitcoin calendar options below apply on April 30th, but this strategy can also be applied to Ether (ETH) options or other timeframes. While costs will vary, this should not affect overall performance.
The slightly optimistic strategy is to buy 0.9 BTC put options for $ 76,000 and sell 2.05 BTC for $ 64,000 at the same time. To complete the trade, you need to buy put options with 1.31 BTC at $ 48,000.
It should be noted that derivatives change the price of these contracts in BTC. Hence, the profit and loss shown above in satoshire (1 / 100,000,000 BTC) as of expiration date.
Although this sell option gives the buyer the right to sell the asset at a predetermined price, the seller is contractually obligated to purchase it. Hence, sell options can also be used for neutral or bullish strategies.
That difference up front with a stick can lead to a $ 10,770 payout.
As you can see from the above estimate, any result that ranges from $ 54,600 (4.3% from the current $ 57,050) to $ 76,000 (up 33.2%) results in a net profit. For example, a 10% price increase to $ 62,750 results in a net profit of $ 9,350, or 0.149 Bitcoin. Meanwhile, the maximum loss for this strategy is $ 7,600 if BTC traded at $ 48,000 on April 30th (15.9% down).
This spread with put options results in a potential profit of $ 10.770 from $ 64,000, which is equivalent to 2.85 times the loss if the price of BTC drops 10% to $ 51,350 on the expiration date.
The multivariate strategy provides the best risk return for the ascendant traders who want to be able to counter the rise in the bitcoin price. Also, there are no advance payments other than the 0.157 BTC margin requirement to cover potential losses.