Trading strategy : “Thanksgiving” Part II

Just a week ago, the Thanksgiving correction took the market by surprise and gave the dip buyers an unexpected Black Friday discount to load up on BTC before our beloved coin can resume its march to the desperately awaited $20k break through.

Just after, we bounced nicely and found great support around the low $16k region. The correction was deemed very healthy and the rapid reversal gave even more confidence to the crypto bulls that this was the final push to $20K. So far, we have failed to even touch it , despite making all time highs on some crypto exchanges.
Time seems to pass so fast in the crypto world that a week can sometimes give the impression of eternity and waiting for the $20k can rapidly feels like waiting for Godot.

Looking at graphs, over the last days, we were having a nice triangle formation. It looked like a break was imminent, with odds favouring more the upside.

Unfortunately, today we failed to break to the upside and quickly lost 600 points to trade $18,800.

That changes the picture and now there is a decent chance we could be retesting the “Thanksgiving” support, which would bring us to the low 18K.

I would the suggest to put on a 11Dec20 $18,500/$18,000 Put spread for $140. It has a -11% Delta and is slightly long vega (at 60 vol, after the vol drop we had over the last days i would not be too worried about that)
To reduce cost, it could be financed by shorting the 11Dec20 $22K call for $85, profiting of the massive negative skew. A bit riskier but the $22k strike should give some head room in case we break above the $20K over the coming days. Happy trading !



The information and opinions contained in this research report have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to its’ accuracy or completeness. Unless otherwise noted, all research reports provide information of a general nature and do not address the circumstances of any particular investor. Neither Covario nor its affiliates accept liability whatsoever for any investment loss arising from any use of this research report or its’ contents.

This research report and all the information, opinions and conclusions contained herein are protected by copyright.

Crypto Market Insights and Thought Leadership by Covario AG.

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