Looking at Bitcoin Strangle

Bitcoin has had a lot of recent volatility. Watching BITO for a possible strangle today. I was thinking 2-weeks, but the bid-ask spreads look wider than 1 week. I seriously doubt that Bitcoin will do nothing for very long right now. If I enter, I’ll update.

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Okay, I’m in. I decided to go with 10/27 instead of 11/4 because the bid-ask spreads were too wide for the 2-week options.

BITO 10/27, C15 0.47, P15 0.32, 0.79 total price. Not a huge position, but I don’t really trade BITO very much.

I should also say that I really don’t know much about Bitcoin or crypto. I have no idea what makes it go up and what makes it go down. But actually, I don’t really care. I just want movement, and it looks like it has been moving lately.


Bitcoin basically traded sideways all day, so I’m going to stand on what I have. The one thing about Bitcoin. It trades 24 hours a day, 7 days per week. The most recent move was a strong rally and that basically started last night around midnight and ended around 8:00am this morning. You can play in the crypto markets and trade all day and all night. However, it order to play options to get the leverage that I like, you need to use an ETF that is based on Bitcoin Futures. The symbol is BITO and it only trades during regular stock market hours.

So, I can watch Bitcoin all weekend, but whatever happens up or down, BITO will just gap on Monday when the markets open. You can see bitcoin in Yahoo Finance (just type “bitcoin”).

Bitcoin is up overnight, not by a lot, but a 5-min chart shows a consolidation since around 6:00am this morning that is suggesting a breakout past the much watched $30,000 level. On a 1-year chart it appears that there is resistance in the lower $30,000 level but the long term chart also seems to suggest a possible breakout to new 52-week highs. Of course, that is not likely to happen in time for my option play, but it is something to watch for the future.

Oh, and when you are dealing with prices in the 10s of thousands like on Bitcoin, specific prices really have no meaning for support and resistance levels. Since nobody really cares about specific prices, you are really dealing in ranges.

Yes the BITO ETF deals in much smaller numbers, but it is tied to Bitcoin futures rather than actual trades of BITO shares so specific prices to the penny on BITO really have little meaning too.

One of the things they’ve been talking about for some months is starting a spot bitcoin ETF that is tied directly to Bitcoin rather than to Bitcoin futures. There were several applications that were shot down by the SEC which was worried about market manipulation and that caused Bitcoin to take a big hit (I profited on a BITO strangle on that move). I see now in the news that people are hopeful that SEC may approve an ETF and this has been driving the recent rally.

There are active SEC applications for the spot ETF, and if any are approved I expect Bitcoin will surge. Unless it doesn’t. :slight_smile:

Well shoot, we had the breakout around 10:45am but it only got to $29,976 before trading down. That’s basically $30K, right?

Anything can still happen…

Interesting. Bitcoin keeps trading up last night and is now only 3.8% from the 52-week high. It is now possible to reach it this week.

Huh? In Euro, it’s at the 52-week high right now.

I show the 52-week high at $31,818 on July 13.

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Okay, I think I see what you are saying. If you use a weekly chart and go by closing prices every week, then yes, we are at the 52-week “high” right now. However, the intra-week high price is >3% higher than the current price. When I say 52-week high, I am talking about the highest intra-day price that was reached in the last 52 weeks. I believe that is what most people mean when they say “52-week high.”

Looks to me that previous 52-week high was €28,540 on 2/7/23.

Now trading at €28,923, a new 52-week high.

Ah, okay, I see that now. BTC-EUR moves along with BTC-USD, however, I think that the difference comes from the FOREX difference between EUR and USD. EUR is weaker today versus the dollar compared to months ago. Therefore, it takes more EUR today to buy 1 Bitcoin than it did months ago.

EUR lost >5% versus USD since the last July Bitcoin high. That accounts for the difference.

Of course, Bitcoin is traded around the world, however, the majority of trading volume occurs in dollars.

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Bitcoin pretty strong all day and I’m still in. At this point, I am really hoping it can beat the USD 52-week high. It’s only 1% away and it could happen any time tonight. The biggest difficulty I have is that my BITO options cannot be traded overnight so if it breaks to a new high I have to hope it holds until US markets open tomorrow.

Okay, so it set a new 52-week high and stayed up there briefly, but is now below it but not a hard reversal. I’m actually disappointed that it hit the 52-week high so fast because now it has to trade all night and all early morning before I can do anything. I can only hope it keeps hitting higher highs

Just hit a higher high. While I would love for it to keep going up all night, I will be perfectly satisfied if it got really boring and just went sideways until the morning. :slight_smile:

I now notice that in the long run, BITO does follow Bitcoin, but not exactly. July 13 was 52-week high for Bitcoin, but BITO, which is tied to Bitcoin Futures, not directly to Bitcoin, has other highs before July 13 that are at higher levels. I think this is because Futures contracts have expiration dates so they have to rotate in BITO so that BITO does not exactly follow Bitcoin. It’s still pretty close. On a daily or intra-day basis, if Bitcoin is up (or down) then BITO is up (or down) in basically the same proportional amount.

I’ll be glad when they finally have a spot ETF that is more exactly tied to Bitcoin.

I just saw Bitcoin have the biggest 5 minute move upward on high volume that they have had in the last year. It might be for a lot longer, but I cannot see 5 minute charts that far back. The move in that 5 mins was more than any whole day in the last year. Not surprisingly, it has given back more than half of that on profit taking. But now that resistance has been shattered above with sellers cleared out, I expect that it may move upward easier now. Unless it goes ahead and crashes. We shall see. :slight_smile:

It went up through that region in a more orderly fashion, setting higher highs overnight. It now appears to be setting up for a negative divergence in multiple time frames. I just hope that it sets another higher high just before the markets open so that I can exit. Worst case, it plunges between 9:00 and 9:30, but I don’t think it is preparing for a crash.

The supposed reason for the big surge:

Okay, so I am still in. Looking at the recent action, I think that there is still a possibility for more breakouts above. I will likely hold for another overnight up move, but we’ll see what happens.