As you may know, I have been very bullish on Bitcoin over the past two years. I believe this is one of those opportunities that I DO NOT want to stand on the sidelines for. The gains have already been incredible, but IMO this markup phase still has much more room to run. I believe there is still plenty of gas in the tank based on the targets I have shared in the hundreds of thousands and even millions (more on that later).
Bitcoin has the volatility of a call option, with the upside potential of a call option, but without the expiration.
Regardless of your beliefs on it, the charts don’t lie. This is behaving like nothing else I’ve seen. If I am going to play this game of the markets with the goal of strong capital appreciation, I DO NOT want to miss out on these potential opportunities that don’t come by often.
SO why am I adding call options in Bitcoin again? The simple answer is if I can get just a few of these to hit, the upside moves can be tremendous. I am not going all in on these calls, and I’m not just blindly throwing money at them. Using the technical analysis that I have come to learn over the years, and choosing the options expiration / strike correctly is still a difficult task. But I will try my best to make it work.
Here are the details of my trade (I was filled on my limit order last night while asleep) but the ask price (27.5) is currently lower than where I was filled (27.7).
Bitcoin Options Trade Details (see disclaimer below)1
Option Type: Call
Expiration: June 25th, 2021 (106 DTE)
Strike: $100,000 (Delta 22)
Fill: $2,770 (NOTE: These are mini contracts, and for each call I paid $27.70 - see footnote below on mini contracts)2
Stop: 10-week SMA (weekly close basis)
I used LedgerX for this trade. I am not affiliated with LedgerX, so please direct your trading/execution questions to them if you decide to trade Bitcoin options there.
Here is the daily chart that was primarily used for this trade:
Here is the rationale for taking this “short-term” trade (I know this label is very subjective, some people have time frames of a day and anything longer than a week is “long term”).
The current trend channel is behaving as I would expect in a markup phase. The reverse trend line (dashed - bottom) is parallel to the primary trend (solid). So far the price behavior is following along as necessary for the trend to remain intact.
Using the expiration of June 25, 2021 I am able to see where the price/date intersection is on the trend channel.
Historically, bitcoin advances after the halving enter a parabolic rise (even on the log scale). This hasn’t happened yet, but if it were to happen, that would be even more bullish than this linear channel (on the log scale).
Here is the weekly chart with my targets:
I don’t believe that million dollar target will hit this cycle, my thinking is that after this cycle tops out, it will need to reaccumulate and build a cause to match those targets.
What I’m looking for is a move similar to the prior two cycles, or somewhere in between. See chart below.
I have shared this with subscribers before:
Shared back in early January, this is now updated to show where the current post-halving cycle lies. It is still between the prior two cycles.
This is what I had to say back in January:
The current rally from the May ‘20 halving is rising at about the average pace of the prior two post-halving moves combined. This is just another way to look at the current rally and gain some perspective as to where it currently is in the 4-year halving cycle, and where it could potentially head towards. Without over-analyzing here, I’m just eye-balling the average peak of the prior two moves:
Orange peak at $800k in May ‘21
Blue peak at $250k in Oct ‘21
The average of these would be about $500k sometime in August? That would be incredible. Not saying this happens, but this is just using prior rallies to get a gauge of what we are potentially looking at.
As always, please use caution when placing trades especially options. Do your research and make sure you are comfortable with losing ALL of the value because that is a very real possibility.
This is my first free trade post since July 2020. If you enjoyed this post and want to be alerted with the premium members when I send out my trade details, consider subscribing. If you are interested in a trial for the premium service please send me an email at chartsforfreedom@gmail.com
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1 mini contract = 0.01 BTC.
In traditional equity options, 1 contract represents 100 shares. LedgerX options do not use a multiplier. 1 contract on LedgerX is equivalent to 0.01 BTC, no multiplier. If you buy 1 call option, you are paying for the right to buy 0.01 BTC at the strike price on the expiration date.
Further, if you are buying 37 call options (0.37 BTC), you are paying for the right to buy 0.37 BTC at the strike price on the expiration date.