Trade 8: Buy Knock-Out Call vs. Sell Knock-In Put for Zero Cost (2)

Trade 8: Buy Knock-Out Call vs. Sell Knock-In Put for Zero Cost. Simultaneously buying a call and selling a put.

1.⁠ ⁠Long BTC Call:

•⁠ ⁠Expiry: 2 months

•⁠ ⁠Strike: current spot

•⁠ ⁠Knock-Out Level: 30% above current spot

•⁠ ⁠If BTC price exceeds the knock-out level on any day during the 2-month period, the call option will be knocked out, resulting in no profit or loss.

2.⁠ ⁠Short BTC Put:

•⁠ ⁠Expiry: 2 months

•⁠ ⁠Strike: 90% of current spot

•⁠ ⁠Knock-In Level: 70% of current spot

•⁠ ⁠The knock-in provides a buffer against a drop in BTC price. No loss until the knock-in level is breached.

Highlights:

•⁠ ⁠Better performance compared to directly holding spot in most scenarios.

•⁠ ⁠Suited for a mildly rising market.

•⁠ ⁠Downside protected unless spot falls more 30% or more.

•⁠ ⁠Zero premium. No funding cost or extra fees.