Not sure which direction the BTC price could be headed? For example, professional traders use the Iron Condor option strategy to place carefully defended bets.

For traders who are undecided about the next step with Bitcoin, the strategy “Long Condor with Call (buy)” or the option strategy “Iron Condor” delivers optimal results with very little risk. This strategy provides downside protection of $ 53,500, which is a 7% downside from the current $ 57,600 and would produce positive results of up to $ 67,500.

The options market offers more flexibility to develop individual strategies. In contrast to futures contracts, there are two separate instruments available. A call option offers the buyer upside protection, while a put (sell) option offers the opposite.

Profitable bitcoin options strategy | Source: Deribit Position Builder

This long Condor strategy was set for the 31st expiration date and uses a slightly bullish range. The same basic structure can also be applied to other time periods or price ranges, whereby the contract numbers may have to be adapted.

Bitcoin was trading at $ 57,600 when the price was played out, but a similar result could be achieved at any price. The minimum contract size depends on the derivatives exchange, but traders must adhere to the recommended ratio to capture the overall strategy structure.

The first trade required the purchase of 0.54 contracts of the $ 52,000 call option to get a positive spread above that price. To cap profits above $ 56,000, traders must sell 0.5 BTC call options.

To further limit profits above $ 64,000, another 0.45 call option should be sold. To complete the strategy, traders need to protect profits over $ 70,000 by buying 0.41 call options if Bitcoin price rises sharply.

The 1.5: 1 risk / reward ratio is a moderate increase

This strategy sounds complicated to implement, but the margin only requires 0.0152 BTC which is also the maximum loss. Traders should keep in mind that if there is sufficient liquidity, it is also possible to close a position before the December 31st expiry.

The maximum net gain is between $ 56,000 and $ 64,000 at 0.0233 BTC, which is 50% more than the potential loss. With 30 days until it expires, this strategy gives the owners security, as there is no liquidation risk in contrast to futures trading.

Additionally, a variable profit margin from a 7% decline to a 17% gain looks conservative and covers the $ 14,000 price range.

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Mr. Teacher

According to Cointelegraph

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