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Using Supply Zones and Call Open Interest for a Bearish Bitcoin Trade

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Summary

This trade idea uses a bearish technical view of bitcoin to motivate selling an out-of-the-money call. The author cites a pattern of lower highs, repeated rejection at supply zones, and weak interest indicated by bitcoin ETF inflows. Notable open interest at the chosen strike is offered as additional context for selecting the contract. The example sells one bitcoin call expiring May 3, 2024, at a $68,000 strike for a stated premium of $172 per bitcoin, with the stated target condition that spot remains below the strike.

The position earns the premium if the call expires out of the money, but losses can grow substantially if bitcoin rises; a sharp volatility-driven rally is specifically identified as adverse. The document gives no stop, hedge, margin requirement, or full payoff analysis, and the technical and flow observations are presented as the rationale rather than tested predictors. It is a single dated example, not evidence that short calls or supply-zone signals are consistently profitable.

Key ideas

  • A lower-high pattern and repeated resistance at supply zones form the bearish thesis.
  • The proposed position sells an out-of-the-money bitcoin call and collects premium upfront.
  • Open interest at the selected strike is cited as supporting context for the trade selection.
  • A large upward move can expose the short call to losses beyond the premium received.
  • The example does not specify hedging, stop rules, or a systematic test of its signals.

Tags

CryptoOptionsTechnical indicatorsRisk management

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