Companies like Tesla, which makes electric cars, Microsoft, which makes Windows, Apple, which makes iPhones, Amazon, which makes e-commerce sites, and Google, which makes search engines, are all planning to release their quarterly financial reports in October. Right now, there are also factors like low profits and the possibility that the global economy will slow down even more.
Investors are concerned that business profitability will decline as a result of the unprecedented magnitude of the United States Federal Reserve’s tightening and growing macroeconomic uncertainties. Also, inflation is high, which makes it hard for companies to hire more people without drastically cutting their profits.
U.S.-listed companies suffer disproportionately from a stronger dollar because their products become more expensive in other countries and because of the decreased revenue coming in from overseas. For example, analysts predict a decline in Google’s revenue growth to around 10% from 40% in 2021.
If the earnings season fails to sustain a small increase, indicating that the stock market will continue to underperform, cryptocurrency investors expect some of those bets to enter Bitcoin. Bitcoin traders face headwinds from the asset class to which it is most closely related. However, inflation fears could be a tailwind if they make people realize how valuable Bitcoin’s scarcity is. The S&P 500 businesses have a combined market capitalization of $32.9 trillion.
Bitcoin traders face headwinds from the asset class to which it is most closely related. However, inflation fears could be a tailwind if they make people realize how valuable Bitcoin’s scarcity is. For people who want the price of BTC to go up, this may be their only chance, but they should be very careful.
Even though futures contracts could help traders who don’t like taking risks to increase their long positions, they could be forced to sell if the price drops a lot before the corporate results calendar. Therefore, experienced traders favor “long butterfly” and other option trading methods.
If a trader buys (makes a purchase) several call options with the same expiration date, he or she triples the chances of making a profit. Using this options method, the trader can make money from a possible rise in value while still limiting risk.
The investor starts the process by buying 13 Bitcoin call options with a strike price of $20,000 and selling 24 Bitcoin call options with a strike price of $23,000. To finish the strategy and protect yourself from losses over $26,000, you must buy call options worth 10.5 BTC.
This method was offered at a BTC price of $19,222 on a derivatives exchange.
Any outcome between $20,690 (up 7.6%) and $26,000 (up 35.3%) would result in a net profit with this method; for instance, the optimal 20% price increase to $23,000 would result in a 1.36 BTC net gain or $24,782 at present levels. Conversely, if the price of bitcoin is less than $20,000 when the contract expires on October 28th, you stand to lose a maximum of 0.46 BTC, or $8,382.
The highest loss in the “long butterfly” technique is equal to three times the maximum gain.
Because this strategy has a low risk of loss, it has a better risk-to-reward ratio than leveraged futures trading. Investors who think that the performance of publicly traded companies will go down may like it.
It’s important to note that the maximum loss can be covered by paying just 0.46 BTC upfront.
Remember that all options have an end date, so any price growth in the underlying asset must occur within that time frame.