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Using a Bitcoin Call Butterfly for a Moderately Bullish Outlook

Article Deribit Insights
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Summary

This trade idea presents a long call butterfly on Bitcoin for a moderately bullish view. The structure buys one lower-strike call, sells two calls at the middle strike, and buys one higher-strike call. The example uses May 2024 options with strikes at $70,000, $72,000, and $74,000, and reports a net debit of $95 per BTC. Its payoff is capped: the greatest profit occurs if Bitcoin expires at the middle strike, while the maximum loss is the initial debit.

The rationale combines positive US spot Bitcoin ETF flows, disclosed institutional holdings, a claimed support area near $65,500, higher lows, and limited rejection around $67,000. The author interprets these observations as evidence that a rally could continue, while choosing a butterfly to target a specific expiration price rather than unlimited upside. The note’s trade terms and market view are tied to its publication context; it provides no backtest, probability estimate, or evidence that the cited technical levels reliably predict returns. The strategy also has a narrow peak-payoff region and can lose its full debit if the market finishes away from the center.

Key ideas

  • A long call butterfly buys lower- and higher-strike calls while selling two calls at the middle strike.
  • The example’s maximum payoff occurs at expiration at the middle strike, while loss is limited to the debit.
  • The bullish thesis cites ETF flows, institutional disclosures, support, and a pattern of higher lows.
  • The trade targets a specific price zone and sacrifices broad upside participation beyond its payoff profile.
  • The commentary offers a dated market thesis rather than tested evidence of strategy performance.

Tags

CryptoOptionsDerivatives pricingTechnical indicatorsRisk management

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