BTC Straddle Structuring involves the construction of a non-directional options strategy for Bitcoin, requiring the simultaneous purchase or sale of both a call and a put option with the same strike price and expiry date. This strategy positions a trader to profit from significant price movement in either direction, without predicting the specific trend. It serves as a volatility play.
Mechanism
The operational process includes selecting an appropriate strike price near the current BTC spot price and a suitable expiration period. It then involves executing concurrent long or short positions in both call and put options. This typically occurs within institutional crypto options platforms or via Request for Quote (RFQ) systems to achieve precise pricing and allocation.
Methodology
The strategic framework behind straddle structuring hinges on expectations of heightened or suppressed BTC volatility. A long straddle profits from large price swings exceeding the combined premium paid, while a short straddle gains from minimal price movement, remaining within the premium received. This method monetizes anticipated stability or instability.
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