Trading giant Cumberland favors selling bitcoin June expiry call options and hedging the same with December options as the U.S. CPI slowed for second month in November. Reports godbole17
The U.S. Bureau of Labor Statistics is scheduled to release the all-important Consumer Price Index figures for November at 8:30 a.m. ET on Tuesday.
To the uninitiated, bullish call options give the purchaser the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date. Meanwhile, put options give the right to sell. In the trade suggested by Cumberland, the June expiry calls will lose premium, making money for the call seller, if the data shows inflation remained elevated in November.
"A low CPI should reassert the market’s confidence in inflation coming down, causing a rally in risk assets but bringing vols [implied volatility] down again as this narrative is already somewhat priced in," Cumberland said.
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