Many of the largest companies worldwide are expected to release their 2Q earnings in October. These include Tesla, an electric carmaker, and tech giants Meta (October 18), Microsoft (October 24), and Apple, Amazon and Google (October 26). The possibility of a more severe global economic slowdown and low profits are all possible.
Investors are concerned that corporate profitability could be at risk due to the unusual nature of the United States Federal Reserve tightening and the mounting macroeconomic uncertainties. Businesses are also being forced to reduce their hiring efforts and take cost-cutting steps due to persistent inflation.
For U.S.-listed companies, strengthening the dollar can be particularly damaging because their products are more expensive in other countries and lower revenue from overseas. Google is one example. It expects to see revenues grow by 10%, compared with a 40% increase in 2021.
The S&P 500 companies account for $32.9 trillion in total value. Crypto investors expect some of these bets to enter Bitcoin (BTC), if earnings season fails sustain a modest growth — signaling that the stock market should continue underperform.
On one hand, traders are under pressure due to Bitcoin’s correlation with equities. However, on the other, BTC’s scarcity could shine as inflation worries arise. While this could create a huge opportunity for those who bet on a BTC price rise, extreme caution is required for those opening positions.
Futures contracts could be used by risk-averse traders to leverage long positions, but they can also be liquidated if there is a sudden fall in price before the company earnings calendar. Pro traders are more inclined to choose options trading strategies like the “long butterflies”.
Trade multiple call (buy), options with the same expiry date can give traders gains that are many times greater than potential losses. This option strategy allows traders to maximize their upside potential while limiting their losses.
Remember that all options have an expiry date. Therefore, the asset’s price appreciation must occur within the set period.
Call options: Be cautious
These are the expected returns from Bitcoin options for Oct. 28 expiry. However, this method can be used with different time frames. The general efficiency of the process will not be affected, although the costs may vary.
Profit / Loss estimate. Source: Deribit Position Builder
The buyer has the right to purchase an asset. However, the seller of the contract may be subject to negative exposure. The “long butterfly” strategy involves a short position with a call option. However, the trade is hedged on both ends — limiting exposure.
The investor purchases 13 Bitcoin call options at a $20,000 strike, and then sells 24 calls of the $23,000 call to initiate execution. To avoid any losses, the trader would purchase 10.5 BTC calls of the $26,000 option to close the deal.
Derivatives Exchanges Price Contracts in BTC Terms, and $19222 was the price at which this strategy was quoted.
This strategy yields a net profit for any outcome that is between $20,690 and $26,000 (up 7.6%) — an example of this would be a 20% optimal price rise to $23,000, which results in a 1.36 BTC net increase, or $24,782 current levels. If the Oct. 28 expiry price is below $20,000., the maximum loss will be 0.46 BTC, or $8,382.
The potential for three-fold greater gains with the “long butterfly” strategy than the maximum loss.
The trade offers a greater risk-to-reward ratio than leveraged futures trading. This is especially true when you consider the potential downside. This trade is attractive to those who expect deteriorating business conditions at listed companies.
It is important to note that 0.46 BTC is the only upfront fee. This is sufficient to cover all losses.
com. You should do your research before making any investment or trading decision.
Eileen Wilson –Technology and Energy
My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.