Quick Highlights of the Week
Bitcoin Consolidates Above $100,000:
Bitcoin remains within the $98,000-$102,000 range after last week’s peak at $103,713. Traders are cautious as liquidity tightens ahead of the holiday season, with skew data signaling mixed sentiment.
Skew Analysis Reflects Defensive Positioning:
7-day Skew: Elevated demand for downside protection, with the 10D and 25D Put Skew at 75% and 100%, respectively.
30-day Skew: Sustained caution, with Put Skew at 50%-75%, reflecting broader market hesitation.
Calendar Spreads on Hold Until January:
Historical data shows that the holiday period often brings erratic volatility. We’ll revisit this strategy in the new year when market stabilize conditions.
Strategy Performance Review
Current Setup:
● Short Put at $90,000 (expiration December 27):
○ Initial Premium: $36.36
○ Last Week’s Premium: $40.41
○ Current Premium: $43.50
○ Weekly Change: Loss of $309 per contract due to rising Put Skew.
● Long Call at $105,000 (expiration December 27):
○ Initial Premium: $16.75
○ Last Week’s Premium: $14.43
○ Current Premium: $13.75
○ Weekly Change: Loss of $68 per contract as Bitcoin consolidates.
Performance Since Inception:
● Total Loss: $637 (last week) → $1,014 (current loss per contract).
Why This Strategy Works Regardless of Market Movement
If Bitcoin Breaks Above $105,000:
○ The Call will deliver substantial profits, offsetting the Put’s losses and generating upside gains.
If Bitcoin Falls Below $90,000:
○ We’ll acquire BTC at $90,000 and pivot to selling covered Calls,generating consistent weekly income.
If Bitcoin Stays Between $98,000 and $102,000:
○ The premiums collected from the Put and Call ensure the strategy is cost-neutral, with no direct losses from holding the options.
Capital Optimization via Simple Earn:
● While waiting for the trade’s outcome, unused margin (held to cover the Put’s potential assignment) is parked in Simple Earn by Coincall.
● This earns passive income with annualized yields between 5%-40%, depending on the terms chosen.
● These earnings add incremental returns, reinforcing the strategy’s resilience during periods of market consolidation.
Learning Opportunity: Decoding Skew in Crypto Markets
What Is Skew?
● Skew measures the difference in implied volatility (IV) between different strikes of options.
● Elevated Put Skew, as seen this week, reflects heightened demand for downside protection, often driven by hedging activity.
Current Skew Dynamics (7-30 Days):
● Short-term (7 days): High Put Skew at 75%-100%, signaling immediate caution.
● Medium-term (30 days): Elevated Put Skew at 50%-75%, showing sustained risk aversion among traders.
How to Use Skew in Trading:
1.High Put Skew: Ideal for selling expensive Puts to capture inflated premiums.
2.Low Call Skew: Presents opportunities to buy cheap Calls for potential upside.
Key Insight:
Skew analysis offers actionable insights into market sentiment, allowing traders to align their strategies with institutional behavior.
Looking Ahead: Market Outlook
1. Bitcoin Range-Bound:
BTC is likely to remain within the $98,000-$105,000 range unless a significant macroeconomic catalyst emerges.
2. Strategy Positioning:
○ Current losses are manageable and in line with expectations given the market’s consolidation.
○ This strategy allows for flexibility in all scenarios, whether BTC rises, falls, or stays within range.
3. Next Steps:
○ Focus remains on monitoring skew and volatility for signs of directional movement.
○ Calendar spreads will be revisited in January for more favorable conditions.
Summary
● Bitcoin remains strong above $100,000 but consolidates in a tight range.
● Our strategy is cost-neutral in the current environment, offering upside potential if BTC breaks above $105,000 or flexibility to buy and monetize BTC if it dips below $90,000.
● Skew insights highlight defensive market sentiment, ideal for Put selling and cautious upside plays.
● Passive income through Simple Earn strengthens the overall trade setup, providing weekly returns on idle capital.
Disclaimer: This article is for educational purposes only and does not constitute financial advice. Every investment involves risk.
Remember to follow daily strategies on our T elegram channel: https://t.me/Tokencimiento/1
I trade crypto options on Coincall. Here’s the link: https://www.coincall.com/r/Tokencimiento15r
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