This simple Bitcoin options strategy lets traders profit while also hedging their bets

For merchants who’re undecided on Bitcoin’s (BTC) transfer, the “lengthy condor with name choices,” or the “iron condor” choices technique, yields optimum outcomes with very low threat. This technique provides safety all the way down to $53,500, which might be a 7% draw back transfer from the present $57,600, and returns a optimistic end result as much as $67,500.

Choices markets present extra flexibility to develop customized methods. In contrast to futures, there are two separate devices obtainable. The decision possibility offers the client upside worth safety, whereas the protecting put possibility provides the alternative.

This lengthy condor technique has been set for the Dec. 31 expiry and makes use of a barely bullish vary. The identical fundamental construction will also be utilized for different durations or worth ranges, though the contract portions may want some adjustment.

Bitcoin was buying and selling at $57,600 when the pricing came about, however an identical end result might be achieved ranging from any worth degree. The minimal contract measurement relies on the derivatives trade, however one must maintain the prompt ratio to carry the general technique construction.

The primary commerce requires shopping for 0.54 contracts of the $52,000 name choices to create optimistic publicity above this worth degree. Then, to restrict positive aspects above $56,000, the dealer must promote 0.50 BTC name possibility contracts.

To additional restrict positive aspects above $64,000, one other 0.45 name possibility contracts needs to be bought. To finish the technique, the dealer wants upside safety above $70,000 by shopping for 0.41 name possibility contracts if the Bitcoin worth skyrockets.

Associated: 3 reasons why Bitcoin’s drop to $56.5K may have been the local bottom

The 1.50 to 1 risk-reward ratio is reasonably bullish

The technique may sound difficult to execute, however the margin required is barely 0.0152 BTC, which can also be the max loss. Merchants ought to do not forget that it is usually doable to shut the place forward of the Dec. 31 expiry if there’s sufficient liquidity.

The max web acquire happens between $56,000 and $64,000 at 0.0233 BTC, which is 50% increased than the potential loss. With 30 days till the expiry date, this technique offers the holder peace of thoughts as a result of, not like futures buying and selling, there is no such thing as a liquidation threat.

Moreover, having a revenue vary that varies from a 7% draw back transfer to a optimistic 17% worth change appears conservative and covers an honest $14,000 worth vary.

The views and opinions expressed listed here are solely these of the author and don’t essentially mirror the views of Cointelegraph. Each funding and buying and selling transfer includes threat. It’s best to conduct your personal analysis when making a choice.