{"id":190584,"date":"2021-02-27T23:30:00","date_gmt":"2021-02-27T20:30:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/this-bullish-bitcoin-options-strategy-lets-traders-speculate-on-btc-price-with-less-risk\/"},"modified":"2021-02-27T23:30:00","modified_gmt":"2021-02-27T20:30:00","slug":"this-bullish-bitcoin-options-strategy-lets-traders-speculate-on-btc-price-with-less-risk","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/this-bullish-bitcoin-options-strategy-lets-traders-speculate-on-btc-price-with-less-risk\/","title":{"rendered":"# This bullish Bitcoin options strategy lets traders speculate on BTC price with less risk"},"content":{"rendered":"

“# This bullish Bitcoin options strategy lets traders speculate on BTC price with less risk <\/strong>”<\/p>\n

Historical data shows that it is nearly impossible to consistently predict Bitcoin\u2019s price action and many traders that attempt this end up losing money. Now that Bitcoin trades near $50,000, the ultimate goal for most traders is to hold on to their current holdings and incrementally add to them in a way that is not terribly risky.\u00a0<\/p>\n

Options strategies provide excellent opportunities for traders who have a fixed-range target for an asset. For example, using leveraged futures contracts might be a solution for a scenario where one expects a price increase of up to 28% over the next month. Of course, using a tight stop loss lessens the viability of the trade.<\/p>\n

On the other hand, using multiple call (buy) options can create a strategy that allows gains that are four times higher than the potential loss. These can be used in both bullish and bearish circumstances, depending on the investors’ expectations.<\/p>\n

The long butterfly strategy allows a trader to profit from the upside while limiting losses. It\u2019s important to remember that options have a set expiry date; therefore, the price increase must happ<\/a>en during the defined period.<\/p>\n

The Bitcoin (BTC) calendar options below are for the March 26 expiry, but this strategy can also be used on Ether (ETH) options or a different time frame. Although the costs will vary, its general<\/a> efficiency should not be affected.<\/p>\n

Profit \/ Loss estimate. Source: Deribit Position Builder<\/em><\/figcaption><\/figure>\n

The suggested bullish strategy consists of buying 1 BTC worth $48,000 call options while simultaneously selling double that amount of $56,000 calls. To finalize the trade, one should buy 1 BTC worth of $64,000 call options.<\/p>\n

While this call option gives the buyer the right to acquire an asset, the contract seller gets a (potential) negative exposure. <\/p>\n

As the estimate above shows, if BTC is trading for $48,700, any outcome between $49,380 (up 1.5%) and $62,630 (up 28.6%) yields a net gain. For example, a 10% price increase to $53,570 results in a $4,000 net gain. Meanwhile, this strategy’s maximum loss is $1,350 if BTC trades below $48,000 or above $64,000 on March 26.<\/p>\n

This allure of this butterfly strategy is the trader can secure a $4,050 gain, which is 3x larger than the maximum loss, if BTC trades from $53,550 to $58,460 expiry. <\/p>\n

Overall it yields a much better risk-reward from leveraged futures trading considering the limited downside. <\/p>\n

The multiple options strategy trade provides a better risk-reward for bullish traders seeking exposure to BTC\u2019s price increase and the only upfront fee required is the $1,350 which reflects the maximum loss if the price is below $48,000 or above $64,000 at the expiry date. <\/p>\n

The views and opinions expressed here are solely those of the <\/em>autho<\/em>r<\/em><\/a> and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.<\/em><\/p>\n