Bitcoin experts prefer this defined-risk strategy for the next leg higher in prices
Financial experts are recommending 'call spreads' as a defined-risk strategy for traders looking to capitalize on potential Bitcoin price increases. This approach allows investors to profit from market growth while capping potential losses through specific strike price combinations.
Why it matters
As Bitcoin prices fluctuate, institutional and retail investors are seeking sophisticated risk-management tools to navigate market volatility.
Missed bitcoin’s BTC $ 79,655.30 initial climb to $80,000 and looking for a smart way in? Industry experts favor a defined-risk strategy known as call spreads for the next leg higher.
The strategy is popular with traders looking to profit from an expected price rise while capping potential losses. It involves buying the right to purchase BTC at a given price, such as $80,000, and simultaneously selling the right for someone else to buy it at a higher price, say $90,000, capping both the upside and downside.
The maximum profit is the difference between the two strike prices minus what the call spread buyer paid for the spread. The maximum loss is limited to the initial premium.
"Call spreads remain an appealing mechanism for upside exposure into September,” said Jean-David Pequignot, the chief commercial officer at Deribit, the world’s largest crypto options exchange by volume and open interest.
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