A sizable bet on bitcoin (BTC) options crossed the tape on Tuesday in an attempt to profit from a possible short-term decline in the price of the cryptocurrency with a floor of $47,000.
The dealer purchased 100 lots of Greeks’ crypto block trading service with an expiration date of March 29. 200 lots of comparable expiry puts at $47,000 were sold to partially finance the live and put options at strikes of $50,000 and $43,000, respectively.
The buyer of a put option has the choice, but not the duty, to sell the underlying asset at a fixed price at a later time. A call buyer is bullish on the market, whereas a put buyer is tacitly bearish.
Greeks.Live informed that the so-called block trade has a theoretical cost of more than $20 million. Large-scale transactions carried out off the ordinary public market are referred to as block trades, and they are often associated with institutional activity.
On the day of expiration, the approach will maximize profit if bitcoin drops to $47,000. Thus, it is anticipated that prices will decline over the coming weeks, but they will not fall below $47,000.
The payoff diagram resembles the body of a butterfly, with the maximum profit at the center and a fixed loss if prices breach the two ends. The tactic is therefore known as a “butterfly” bet.
Peak profit is displayed at $47,000 on the simulated payoff diagram, with breakeven points at $44,201 and $49,770.
Adam, an analyst at Greeks.Live, says, “Whales have continued to add to their short positions, betting that bitcoin will fall slightly before March 29.”
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