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Using a Bitcoin Call Butterfly for a Moderate Expiry Target

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Summary

The document describes a long call butterfly on Bitcoin options, built by buying one lower-strike call, selling two calls at a middle strike, and buying one call at a higher strike. Its example uses June expiry strikes of $73,000, $74,000, and $75,000, with a stated net debit of $26 per BTC and maximum profit of $974 per BTC. The payoff is greatest if Bitcoin finishes at the middle strike; the initial debit limits the stated loss.

The trade is framed as a way to benefit from a moderate rise after Bitcoin fell following strong US employment data. The commentary also cites spot ETF inflows, technical support, and open interest near the relevant strikes, alongside rate cuts by several central banks. These observations motivate the bullish scenario but do not establish its probability. The analysis is tied to a particular market date and expiry, and the document warns against relying on it as the sole basis for a trading decision.

Key ideas

  • A long call butterfly combines one lower-strike call, two short middle-strike calls, and one higher-strike call.
  • The example’s maximum payoff occurs when Bitcoin expires at the middle strike.
  • The stated net debit caps the example trade’s loss.
  • The author bases the bullish case on technical support, ETF inflows, and nearby options open interest.
  • The payoff depends on the expiry price, so the strategy is designed for a limited target zone.

Tags

CryptoOptionsDerivatives pricingRisk management

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