Bitcoin Expectations have challenged significant volatility in August, negotiating in a range. Since market dynamics indicate a continuous short -term volatility regime, 10x Research highlights the “short lock” as an ideal game.
“Given the current dynamics on the Bitcoin options market, a short stranger seems well suited for next month. Bitcoin exchanges at around $ 113,000 and an expected range between $ 95,000 and $ 125,000, selling money outside [September expiry] Put nearly $ 95,000 alongside a [September expiry] The call nearly $ 125,000 offers the opportunity to capture the premium, “Markus Thielen, founder of 10x Research, said in a customer relationship on Thursday.
A short lock implies simultaneous writing (sale) Strong calls for money out of money and the lower OTM strike put with the same expiration, positioned equidistant from the cash price of the underlying assets.
The strategy is similar to the sale of hard and lowering movements insurance in exchange for a bonus, which represents the maximum achieveable profit if the cash price remains between the two prices of the start – $ 95,000 and $ 125,000 in this case.
Sales options (or strangle) is a common strategy when implicit volatility (IV) Get the volatility carried out, because this allows merchants to grasp richer bonuses, and the market should remain relatively stable.
“The strategy works because the implicit volatility curve is negotiated above the levels made, the signaling options are too expensive and the market is unlikely to provide large movements outside of your short-term beach,” said Thielen. “The options for the structure of the implicit volatility term indicate calm in the short term.”
Implicit volatility (IV) The structure of the term is a graphic representation showing how volatility should evolve through different future time horizons. It is generally ascendant, reflecting growing uncertainty and risk as the expiration is lengthened.
Risk reward profile
BTC must continue to negotiate between $ 95,000 and $ 125,000 for the suggested strategy to generate profits. The trading linked to the beach will reduce the request for OTM and Put calls, draining the bonus of these options and generating a profit for the strangling sellers.
The previous recommendation of Thielen from early August was also a short lock, involving a put of $ 105,000 and a call of $ 130,000. This strategy generated a yield of 3.5%.
Note, however, that short strangles have significant risks, especially in the case of a sudden peak of volatility, which can cause substantial losses. Consequently, traders must constantly monitor the position and market variables relevant to effectively manage risks.
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