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Using a Put Butterfly to Target a Bitcoin Expiry Level

Article Deribit Insights
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Summary

The article proposes a BTC put butterfly for a bearish market outlook, using a higher-strike long put, two short puts at the middle strike, and a lower-strike long put. Its example uses June 28, 2024 options at $62,000, $60,000, and $58,000 strikes. The position has a stated debit of $155 per BTC, with maximum profit of $1,845 per BTC if BTC settles at the middle strike of $60,000; the initial debit limits the loss if the market rises.

The rationale cites a downtrend marked by lower highs, consecutive outflows from U.S. spot Bitcoin ETFs, and the report that most IBIT purchases came from retail investors. These are presented as context for the trade rather than evidence that the forecast will be correct. The payoff is concentrated near the middle strike at expiry, so results depend on both the settlement price and timing. The article is a dated trade illustration, not a tested strategy or a general recommendation; it also cautions against using the analysis as the sole basis for a trading decision.

Key ideas

  • A put butterfly combines one higher-strike long put, two middle-strike short puts, and one lower-strike long put.
  • The example targets BTC settlement at $60,000 on June 28, 2024, where it states the maximum profit occurs.
  • The example’s debit is $155 per BTC, which is also the stated maximum loss.
  • A bearish trend and ETF flow observations motivate the trade, but do not establish that it will succeed.
  • The payoff is sensitive to the expiry price and should be understood as a dated example.

Tags

CryptoOptionsDerivatives pricingRisk management

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