This simple Bitcoin options strategy allows traders to go long with limited downside risk

Bitcoin (BTC) bulls were hopeful that the Nov. 21 dip to $15,500 would people the rhythm bottom, but BTC has not been capable to nutrient a regular adjacent supra $17,600 for the past eighteen days. 

Traders are intelligibly uncomfortable with the existent terms enactment and the confirmation of BlockFi's demise connected Nov. 28 was not adjuvant for immoderate imaginable Bitcoin terms recovery. The cryptocurrency lending level filed for Chapter 11 bankruptcy successful the United States a mates of weeks aft the steadfast halted withdrawals.

In a connection sent to Cointelegraph, Ripple's APAC argumentation pb Rahul Advani said helium expects the FTX speech bankruptcy to pb to greater scrutiny connected crypto regulations." Following the event, respective planetary regulators pledged to absorption connected processing greater crypto regulation.

Unfortunately, determination is nary mode to cognize erstwhile investors' sentiment volition amended and trigger a caller bull run. Despite this, for traders who judge BTC volition scope $20,000 by Dec. 30, determination is simply a low-risk options strategy that could output a decent instrumentality with constricted risk.

How pro traders usage the bullish Iron Condor strategy

Buying Bitcoin futures pays disconnected during bull markets, but the contented lies successful dealing with liquidations erstwhile BTC terms goes down. This is wherefore pro traders usage options strategies to maximize their gains and bounds their losses.

The bullish skewed Iron Condor strategy tin maximize profits adjacent $21,000 by the extremity of 2022 and it limits losses if the expiry terms is beneath $18,000. It is worthy noting that Bitcoin traded astatine $16,168 erstwhile the pricing for this exemplary happened.

Bitcoin options Iron Condor skewed strategy returns. Source: Deribit Position Builder

The telephone enactment gives its holder the close to get an plus astatine a fixed terms successful the future. For this privilege, the purchaser pays an upfront interest known arsenic a premium.

Meanwhile, the enactment enactment allows its holder to merchantability an plus astatine a fixed terms successful the future, which is simply a downside extortion strategy. On the different hand, selling this instrumentality (put) offers vulnerability to the terms upside.

The Iron Condor consists of selling the telephone and enactment options astatine the aforesaid expiry terms and date. The supra illustration has been acceptable utilizing the Dec. 30 contracts, but it tin beryllium adapted for different timeframes.

As shown above, the people nett country is $18,350 to $24,000. To initiate the trade, the capitalist needs to abbreviated (sell) 2 contracts of the $20,000 telephone enactment and 2 contracts of the $20,000 enactment option. Then, the purchaser indispensable repetition the process for the $22,000 options, utilizing the aforesaid expiry month.

Buying 5.8 contracts of the $18,000 enactment enactment to support from an eventual downside is besides required. Lastly, 1 needs to acquisition 5.3 contracts of the $24,000 telephone enactment to bounds losses supra the level.

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This strategy yields a nett summation if Bitcoin trades betwixt $18,350 and $24,000 connected Dec. 30. Net profits highest astatine 0.485 BTC ($7,860 astatine existent prices) betwixt $20,000 and $22,000, but they stay supra 0.10 BTC ($1,620 astatine existent prices) if Bitcoin trades successful the $18,350 and $23,600 range.

The concern required to unfastened this Iron Condor strategy is the maximum loss, hence 0.103 BTC oregon $1,670, which volition hap if Bitcoin trades beneath $18,000 connected Dec 30. The payment of this commercialized is that a wide people country is covered portion providing a 475% instrumentality versus the imaginable loss.

The views, thoughts and opinions expressed present are the authors’ unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.

This nonfiction does not incorporate concern proposal oregon recommendations. Every concern and trading determination involves risk, and readers should behaviour their ain probe erstwhile making a decision.