Professional traders have found a way to hedge their Bitcoin bets during the Q2 earnings season by using the iron condor options strategy. This strategy aims to take advantage of potential price movements triggered by the release of Q2 earnings numbers from some of the world’s largest companies.
The earnings numbers, expected in July from companies like UnitedHealth, Citigroup, JPMorgan, Bank of America, Morgan Stanley, Tesla, Google, Apple, Meta, Microsoft, and Amazon, could have a significant impact on Bitcoin’s price. With these S&P 500 companies accounting for a combined market capitalization of $36.5 trillion, positive earnings reports may boost investors’ appetite for risk-on assets, potentially leading to an increase in Bitcoin’s price.
However, there is still a level of uncertainty surrounding these earnings reports. Traders who anticipate a global economic slowdown could profit if these companies fail to deliver earnings growth, which would further add uncertainty to the economies. Weak earnings seasons pose a serious threat as governments rely heavily on taxes from both companies and consumers.
To navigate this uncertainty, professional traders are turning to the bullish iron condor strategy. This strategy allows them to maximize gains while limiting losses if Bitcoin trades above $31,550 in July. By using Bitcoin options, traders can avoid liquidations that occur when Bitcoin’s price goes down, ensuring their gains and losses are controlled.
The iron condor strategy involves selling call and put options at the same expiry price and date. For example, traders can sell call and put options at the $33,000 and $36,000 levels respectively, using the July 28 contracts or other suitable timeframes. They can also buy put options at the $31,000 level to protect against potential downsides and call options at the $38,000 level to limit losses above that level.
This strategy aims for a target profit range of $31,550 to $38,000, requiring a modest 3% Bitcoin price gain. The net profits peak at 0.206 BTC ($6,290) between $33,000 and $36,000, but they remain above 0.087 BTC ($2,655) if Bitcoin trades between $32,150 and $37,150. The maximum loss in this trade is 0.087 BTC ($2,655) if Bitcoin trades below $31,000 on July 28.
The iron condor strategy provides traders with leverage opportunities without the liquidation risks associated with futures contracts. It covers a wide target area while offering a potential 238% return compared to the potential loss. However, it’s important to note that this article does not provide investment advice and readers should conduct their own research before making any investment or trading decisions.