Here’s how pro traders use Bitcoin options to profit even during a sideways market

Bitcoin (BTC) terms swings mightiness beryllium intolerable to predict, but determination is simply a strategy often utilized by pro traders that yields precocious returns with minimal cost.

Typically, retail traders trust connected leveraged futures positions which are highly susceptible to forced liquidations. However, trading Bitcoin options supply fantabulous opportunities for investors aiming to maximize gains portion limiting their losses.

Using aggregate telephone (buy) options tin make a strategy susceptible of returns six times higher than the imaginable loss. Moreover, these tin beryllium utilized successful bullish and bearish circumstances, depending connected the investors' expectations.

The regulatory uncertainty surrounding cryptocurrencies has agelong been a important setback for investors and this is different reasons wherefore neutral marketplace strategies person drawn traders' attraction since Bitcoin's rally stagnated adjacent $47,000 connected March 30.

How to nett successful a sideways market

The agelong butterfly strategy allows a trader to nett adjacent if Bitcoin's terms remains flat. However, it's important to retrieve that options person a acceptable expiry date. This means the desired terms result indispensable hap during a specified period.

The Bitcoin options were acceptable for the April 29 expiry, but this strategy tin besides beryllium utilized connected Ether (ETH) options oregon a antithetic clip frame. At the clip of writing, Bitcoin was trading astatine $47,370 and though the costs volition vary, their wide ratio should not beryllium affected.

Profit / Loss estimate. Source: Deribit Position Builder

The suggested bullish strategy consists of buying 7.3 BTC telephone (buy) options with a $46,000 onslaught to payment from a terms increase. Meanwhile, selling 16 BTC telephone (buy) options astatine 50,000 creates a antagonistic vulnerability supra that level.

The trader should bargain 4.8 BTC worthy of $52,000 telephone options and 3.9 BTC astatine $55,000, balancing retired the hazard supra this price.

The gains tin beryllium 4 times higher than the imaginable loss

As the estimation supra shows, immoderate result betwixt $46,700 (down 1.5%) and $53,500 (up 12.9%) yields a nett gain. The champion imaginable result happens astatine $50,000 and results successful a 0.47 BTC nett gain. Meanwhile, this strategy's maximum nonaccomplishment is 0.11 BTC if the terms connected April 29 trades beneath $46,000 oregon supra $55,000.

The allure of this butterfly strategy is the trader tin unafraid gains that are 6 times larger than the maximum loss. Overall it yields a overmuch amended risk-reward versus leveraged futures trading, considering the constricted downside.

This options strategy commercialized provides upside adjacent if Bitcoin's terms remains level and the lone upfront interest required is 0.11 BTC, which besides reflects the maximum loss.

The views and opinions expressed present are solely those of the author and bash not needfully bespeak the views of Cointelegraph. Every concern and trading determination involves risk. You should behaviour your ain probe erstwhile making a decision.