The last 29 days have seen Bitcoin ( BTC) fluctuate between $31,000 and $36,000, as the effects of the recent China ban along with a $1.4 Billion Grayscale GBTC share unlocking continue their pressure on markets.
China’s government took a number of measures to stop cryptocurrency mining and trading. They ordered the immediate shutdown of certain operations and instructed domestic banks to suspend accounts of those involved in the industry.
The $21 billion trust fund Grayscale is currently in trouble. Its GBTC security and the 6-month lock-up by institutional investors ends . This could lead to a $1.4 billion sale. It is worth noting, however that 654,000 BTC tokens currently under management won’t be traded on the market.
These factors have caused Bitcoin prices to remain in a range for months. Traders appear to be waiting until the situation is resolved.
Although traders are proficient at trading perpetual futures contracts well, many are not aware of other instruments that can be used in order to maximize their profits. This is especially true in markets that fluctuate sideways, which creates an ideal trading environment.
One strategy for options can be designed to maximize gains even if there is little price action.
A trader can use both put (sell), and call (buy) options to create strategies that generate sideways market gains. These options can be used in both bullish or bearish conditions, and most derivatives trading platforms offer options platforms.
The Iron Condor strategy favors a narrow range
The Iron Condor neutral strategy consists of selling a $32,000 call and a $34,000 put to increase Bitcoin exposure. These trades are based on Bitcoin’s price of $31,750. The trade has an expiry date of Aug. 27, which is 40 days.
To protect against price drops below $28,000 and Bitcoin appreciation above $38,000, two out-of-the money (small odds) positions will be required. These trades provide traders with additional security and reduce the margin (collateral).
A positive outcome is any result between Aug. 27 at $29,200 (down 8.8%) and 36,000 (up 15.5%) will be achieved. A 0.09 Bitcoin profit is possible between $31,800 to $34,200. The worst outcome is a loss of 0.045 Bitcoin.
An identical structure could be used for Ethereum (ETH) options, but traders must account for the London hardfork on Aug. 4, which can potentially cause sharper volatility.
These views and opinions are the author’s and do not necessarily reflect those of Cointelegraph.com. You should do your research before making any investment or trading decision.