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Wednesday

20 January 2021

How One Bitcoin Options Trader Turned $638K Into $4.4M in 5 Weeks - CoinDesk

How One Bitcoin Options Trader Turned $638K Into $4.4M in 5 Weeks - CoinDesk


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Indeed, some traders with bullish outlooks have recently generated significant profits by taking long positions using the cheap out-of-the-money call options.

30, someone (a single trader or small group) bought 16,000 January expiry call options at the $36,000 strike for 0.003 bitcoin per contract, according to data shared by Deribit.

As of now, the $36,000 call is an out-of-the-money call option – one which has no intrinsic value due to the spot price hovering below the strike price. .

Taking on an options trade brings with it even more risk than just buying bitcoin outright.

29, yielding a loss of $638,400 (the total premium the trader paid) if bitcoin settles below $36,000 on that day.

Then again, the maximum loss the option trader can suffer is limited to the extent of premium paid, which is $638,400 in this case. 

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