Bitcoin (BTC) traders appear undecided on the next step, and this is reflected in the toll oscillating between $58,400 and $63,400 over the last xiv days. There are some bearish signals coming from the Us regulatory front, just at the same time, the Bitcoin exchange-traded funds (ETF) surpassing $i.two billion in avails under management has also boosted investors' expectations.

Bitcoin price in USD on Coinbase. Source: TradingView

A Nov. 5 CryptoQuant report confirmed that whales have deemed for most selling pressure in recent days. The on-chain monitoring resource focused its attention on the "exchange whale ratio" — the pct of inflows coming from the largest wallets — and showed a articulate increment from the middle of October until today.

Moreover, on Nov. 1, the U.S. Treasury Department urged Congress to act promptly to enact legislation to ensure that payment stablecoin issuers are regulated similarly to U.Due south. banks. In practise, the report recommends that stablecoins should be issued only through "entities that are insured depository institutions."

Nonetheless, institutional coin managers managed to add $2 billion worth of Bitcoin through mutual funds in October. According to the October. 31 CoinShares menses written report, the ProShares Bitcoin Strategy ETF, which launched officially on October. nineteen, accounted for $1.two billion in inflow.

Options allow traders to bet on bullish and bearish moves

Contrary to popular belief, derivatives markets were not designed for gambling and excessive leverage. Derivatives trading has been around for more than v decades, and institutional traders have been shifting their attention — and book — to cryptocurrency over the past couple of years.

The subject became the centerpiece on July vii, as Bloomberg reported a $4.8-1000000 options trading gain from the husband of Nancy Pelosi, the speaker of the U.S. House of Representatives. In a July ii financial disclosure, Paul Pelosi reported exercising call options to acquire 4,000 shares of Alphabet, Google's parent company, at a strike price of $1,200.

Options trading presents different opportunities for investors seeking to profit from increased volatility, maximizing gains if the toll remains in a specific range, or obtaining protection from sharp cost drops. Those complex trades involving more than 1 instrument are known as options structures.

How to limit losses and proceed unlimited gains

For those unfamiliar with options trading, Cointelegraph previously published an article detailing all of the ins and outs of options, including the benefits over futures contracts trading.

To hedge losses from unexpected toll swings, one can use the "adventure reversal" options strategy. The investor benefits from being long on the call options but pays for those by selling the put. Basically, this setup eliminates the risk of the stock trading sideways but does come with substantial chance if the nugget trades down.

Profit and loss gauge. Source: Deribit Position Builder

The above merchandise focuses exclusively on December. 31 options, simply investors volition detect like patterns using unlike maturities. First, i needs to buy protection from a downside motility by buying 2.45 BTC puts (sell) $44,000 options contracts.

So, the trader will sell 2 BTC put (sell) $54,000 options contracts to net the returns above this level. Finally, ownership ii.20 phone call (buy) $85,000 options contracts for positive cost exposure.

That options structure results in no proceeds or loss between $54,000 (down by 11.5%) and $85,000 (upwardly by 39%). In doing this, the investor is betting that Bitcoin's toll on December. 31 at 8:00 am UTC volition be to a higher place that range while gaining exposure to unlimited gains and a maximum 0.455 BTC loss.

There is no cost associated with this options structure, but the exchange will require a margin deposit to comprehend potential losses. Keep in mind that the minimum options trade on near derivative exchanges is 0.10 BTC contract.

The views and opinions expressed here are solely those of the writer and practice not necessarily reverberate the views of Cointelegraph. Every investment and trading motility involves take chances. You should conduct your ain research when making a decision.