Bitcoin Put Butterflies for a Defined-Risk View on Further Weakness

Summary

The article presents a long put butterfly as a limited-cost strategy for a trader expecting Bitcoin weakness around a target price. The example buys one put at the higher strike, sells two puts at the middle strike, and buys one put at the lower strike, using the same expiry and equally spaced strikes. Its listed April 26, 2024 structure uses 52,000, 50,000, and 48,000 strikes. The stated target is for Bitcoin to finish above 50,000, where the payoff is said to reach its maximum.

The rationale is that ETF flows and the response from a four-hour demand zone appear weak, suggesting limited investor willingness to buy the dip. The article states a 30-dollar-per-BTC debit and a maximum profit of 1,970 dollars per BTC, with loss limited to the initial debit if the market rises. A butterfly’s payoff is concentrated around its middle strike, so outcomes depend on the expiry price and execution costs. This is a single dated example, not evidence of repeatable profitability, and the stated market rationale is qualitative.

Key ideas

• A long put butterfly combines one higher-strike put, two short middle-strike puts, and one lower-strike put.
• The example uses equidistant strikes and a common expiry, with its peak payoff at the middle strike.
• The initial debit limits the strategy’s stated loss, while its payoff depends on the expiry price.
• Weak ETF flows and a muted demand-zone response form the article’s bearish rationale.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.