Has the bloom come off the crypto rose? Bitcoin, what I’d consider the benchmark for cryptocurrencies, has had a tough time after hitting all-time highs at the beginning of the month. The crypto market had been hoping for a flood of liquidity that would weaken the dollar and push Bitcoin higher. But uncertainty about tariffs and weak longs exiting positions have weighed on Bitcoin, and the falling probability that the Fed will cut rates again in December sent it sharply lower yesterday. IBIT, the EFT that tracks Bitcoin, fell on heavy volume, putting it at the bottom of its recent range. But if the IBIT’s sell-off flushed out the skittish bulls, and the bad news is already baked into its price, it might present a contrarian bullish opportunity. IBIT’s OTM calls are trading over equidistant OTM puts, indicating that the market sees risk to the upside. That might be enough for a trader to consider a bullish strategy. IBIT’s IV has climbed on Bitcoin’s recent price swings, and its 52% overall IV and 47% IV rank make its options good candidates for short premium trades. If you think IBIT might bounce back over the next few weeks, the short put vertical that’s long the 58.5 put and short the 60.5 put in the December weekly expiration with 36 DTE is a bullish strategy that collects a credit 1/3 the width of its strikes, has an 78% prob of making 50% of its max potential profit before expiry, and that generates $.30 of positive daily theta.
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