An option bid to exit consolidation
The crypto market has been stagnating for the last few weeks.
The amplitude of the fluctuations is narrowing, but soon the spring may loosen and the quotes will show acceleration again.
To make money on volatility, it is not necessary to focus on movement in a certain direction, in such a situation in options you can simultaneously open positions for both growth and decline.
In times of calm in the market, options are relatively cheap due to a reduction in volatility and it is profitable to buy them during periods of calm in the market.
The amplitude of the fluctuations is narrowing, but soon the spring may loosen and the quotes will show acceleration again.
To make money on volatility, it is not necessary to focus on movement in a certain direction, in such a situation in options you can simultaneously open positions for both growth and decline.
In times of calm in the market, options are relatively cheap due to a reduction in volatility and it is profitable to buy them during periods of calm in the market.
The spring is compressed
Straddle is a strategy in options on any asset The basic straddle option strategy involves buying an equal number of options (put and call) on the same asset with the same expiration date and a strike price close to the current market price.
Let's note the key features of optional straddles: •
Since the strike of the purchased put and call options is the same, it is logical that one of them will depreciate, and the other will have some value at the time of execution.•
The amount of profit on an option straddle at the time of execution will be greater the more the value of the asset deviates from the strike. In the worst case, such a strategy will only retain part of its original value due to the temporary decay of the price of its options.
But with a successful scenario, the straddle profit may be several times higher than the cost of opening a position.• It is not necessary to hold the purchased options until they exit circulation. Very often, the maximum profit can be recorded at times of strong market movement.•
In the best case scenario, if you hold a straddle, you can profitably sell both put and call options for more than the purchase price. This happens with strong multidirectional movements of the underlying asset.•
The risk of losing funds when buying options is limited by the initial cost of opening positions. When buying a straddle, this risk is slightly lower, since half of the options included in this strategy will retain some value by the time they are executed.•
It is more profitable to buy straddles during periods of consolidation or stagnation of the market.
The reduced level of volatility contributes to the simultaneous relative cheapness of put and call options.
Selection of options to open a straddle strategy
To profit from a possible strong market movement in the coming days, a series of premium options with execution in a week are suitable.
In order to purchase a straddle, contracts are selected with a price as close as possible to the current market rate.
Let's note the key features of optional straddles: •
Since the strike of the purchased put and call options is the same, it is logical that one of them will depreciate, and the other will have some value at the time of execution.•
The amount of profit on an option straddle at the time of execution will be greater the more the value of the asset deviates from the strike. In the worst case, such a strategy will only retain part of its original value due to the temporary decay of the price of its options.
But with a successful scenario, the straddle profit may be several times higher than the cost of opening a position.• It is not necessary to hold the purchased options until they exit circulation. Very often, the maximum profit can be recorded at times of strong market movement.•
In the best case scenario, if you hold a straddle, you can profitably sell both put and call options for more than the purchase price. This happens with strong multidirectional movements of the underlying asset.•
The risk of losing funds when buying options is limited by the initial cost of opening positions. When buying a straddle, this risk is slightly lower, since half of the options included in this strategy will retain some value by the time they are executed.•
It is more profitable to buy straddles during periods of consolidation or stagnation of the market.
The reduced level of volatility contributes to the simultaneous relative cheapness of put and call options.
Selection of options to open a straddle strategy
To profit from a possible strong market movement in the coming days, a series of premium options with execution in a week are suitable.
In order to purchase a straddle, contracts are selected with a price as close as possible to the current market rate.
To form a position, you need to buy BTC Call and BTC Put at a strike as close as possible to the current price.
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