It’s turning out to be a boring summer for directional traders in the bitcoin market: The cryptocurrency has gone comatose in a narrow range above $30,000, less than half the all-time high reached just two months ago.
But some options traders are busy as ever, taking relatively high-risk strategies to profit from the cryptocurrency’s continued price consolidation. One of those strategies involves putting on “short strangles,” essentially a bet that bitcoin’s price won’t break out anytime soon.
“Our favorite trade continues to be short BTC strangles within the $30,000 to $40,000 range,” Singapore-based QCP Capital, said in a Telegram post on June 30. “With psychological resistance at $40,000 and strong support at $30,000, there’s a good chance that BTC trades in this $10,000 range in the near future, which would likely cause implied volatility to collapse.”
QCP said this week its conviction about the short strangle has only strengthened, given the lack of market-moving catalysts in the short term.
“Right now, our trading plan follows the 2018 BTC analog where we expect a dampened trading environment from here to August (short volatility), followed by a rally,” the firm said.