Bitcoin Put Butterfly for a Gradual Short-Term Decline

Summary

This strategy note presents a long put butterfly for a trader expecting Bitcoin to decline gradually toward a nearby demand zone. The structure uses puts with one expiry: buy one at a higher strike, sell two at an intermediate strike, and buy one at a lower strike, with equal spacing between strikes. The example uses strikes of $63,000, $61,000, and $59,000. It reports a $70 per Bitcoin debit and a maximum profit of $1,930 per Bitcoin if Bitcoin expires at the middle strike of $61,000.

The rationale cites recent price weakness near resistance, weaker Bitcoin ETF inflows, and a demand zone around $61,800 to $60,000 that might temporarily slow a sell-off. The bounded payoff targets a specific expiry price region: a rise or a sufficiently large fall can reduce the payoff, while the stated maximum loss is the initial debit. These figures and market levels belong to the article's dated example. The note provides no backtest or broader probability analysis, and cautions against using its analysis as the sole basis for a trading decision.

Key ideas

• A long put butterfly combines a higher-strike long put, two short middle-strike puts, and a lower-strike long put.
• The example targets Bitcoin expiry near the middle strike of $61,000.
• The stated strategy debit is $70 per Bitcoin, which also limits the example's maximum loss.
• The market rationale points to weakness near resistance and a demand zone around $61,800 to $60,000.
• The payoff is concentrated around the middle strike, and the note provides no backtest or probability analysis.

Tags

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