Skip to content
All library documents

Using a Bear Call Spread for a Bitcoin Downside View

Article Deribit Insights
Read the original

Summary

This trade note describes a bear call spread for a trader who expects Bitcoin to stay below a chosen level. The structure sells a call and buys another call at a higher strike with the same expiry. The example uses August 16, 2024 calls at $55,000 and $56,000, respectively, for a net credit of $325 per BTC. If BTC remains below the short strike at expiry, the spread can retain that credit; the stated maximum loss is $675 per BTC if the spread reaches its full width.

The bearish rationale combines a broad crypto sell-off, macroeconomic uncertainty, reported crypto asset transfers by Jump Crypto, and a breach of the lower boundary of a Bitcoin trading channel. The note treats these as reasons to expect continued weakness, not proof of it. Its market and political context is specific to the article’s publication period, and the example’s payout figures do not establish that the setup is profitable across other prices, expiries, or trading costs. The author also cautions that the analysis should not be the sole basis for a trade.

Key ideas

  • A bear call spread sells a call and buys a higher-strike call with the same expiry.
  • The example collects a $325-per-BTC credit using August 16, 2024 calls at $55,000 and $56,000.
  • The spread’s maximum gain is the net credit, while its stated maximum loss is $675 per BTC.
  • The bearish thesis cites a crypto market sell-off and Bitcoin’s break below a channel boundary.
  • The trade thesis is conditional and based on contemporaneous market factors, not a guarantee of direction.

Tags

CryptoOptionsRisk managementTechnical indicators

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