Historical data shows that it is nearly impossible to consistently predict Bitcoin’s price movement, and many traders who try to do so end up losing their money. Now that Bitcoin is trading at around $ 50,000, the ultimate goal of most traders is to keep their existing assets and add them gradually in a way that there is no risk.
Options strategies provide good opportunities for traders with a fixed time limit on an asset. For example, using leveraged futures contracts could be the solution to a scenario where prices are expected to rise to 28% over the next month. Of course, we are reducing the possibility of using an arbitrary stop loss.
On the other hand, using multiple call (buy) options can create a strategy that realizes four times the potential loss. They can be used for both bullish and bearish ratios, depending on investor expectations.
The long butterfly strategy allows the trader to profit from growth while limiting losses. It is important to remember that options have a specific expiration date; Therefore, the price increase must occur within the specified period.
The Bitcoin (BTC) calendar options below will expire on March 26th, but this strategy can also be used for Ether (ETH) options or other timeframes. Although the cost will vary, this should not affect the overall performance.
The suggested bullish strategy is to buy 1 BTC for $ 48,000 call options and sell twice as $ 56,000. To complete the transaction, you must purchase 1 BTC with a value of $ 64,000 for call options.
Although this purchase option gives the buyer the right to purchase the asset, the seller assumes the negative (potential) risk on the contract.
As you can see from the above estimate, if BTC was trading at $ 48,700, a result from $ 49,380 (up 1.5%) to $ 62,630 (up from 28.6%) would give a net result. For example, a 10% price increase to $ 53,570 results in a net profit of $ 4,000. Meanwhile, the maximum loss for this strategy is $ 1,350 if Bitcoin traded for less than $ 48,000 or more than $ 64,000 on March 26.
The appeal of this butterfly strategy is that a trader can make $ 4,050, which is three times the maximum loss if BTC trades between $ 53,550 and $ 58,460.
Overall, this provides a better return on risk than trading leveraged futures contracts due to the limited drawbacks.
The multivariate trading strategy provides the best risk return to traders looking to increase the bitcoin price, and the only offered commission is $ 1,350, which reflects the maximum loss if the price is below $ 48,000 or more than $ 64,000 at the expiration date. …