12 April, 2022 seen 258For the past two months, I've been experimenting with trading Bitcoin and Ethereum futures on the Deribit platform. So far I can report mixed success. For most of the time, I was trading a 1-min chart, as it seemed to offer more trades, more excitement, yes it worked quite well, even profitable, but in the end, I always ended up blowing up my account,…
About 5 years ago I started a simple, so-called 52-Week Money Saving Challenge.
The rules for this challenge are very simple - to deposit in the first week one euro, in the second week - two, third week - three, etc. The amount after each week continues to grow, up to the last week of the year when it is 52 euros. The final sum at the end of the investment period equals 1378.
For this year's 52-week challenge, I have decided to scale it up huge, by using margin and bitcoin futures with 125x leverage. Instead of investing 1 USD in bitcoin every week, I will invest 1 USD to buy bitcoin futures with 125x leverage, or using leverage will turn 1 USD into USD 125.
In that manner I will have a dollar cost averaging futures contract, on whom I will sell call options, once there will be enough bitcoin to cover.
On the Bybit trading platform, the minimum amount for selling call options on Bitcoin is 0.01 BTC. Using Bitcoin perpetual futures and 125x margin it would ask for just USD 2.46 to own a 0.01 BTC futures contract, on whom we might already sell 0.01 call option.
On Week 1 (May 21, 2023) I bought a 0.004 BTC-Perpetual contract at $
26,912.10, with a total worth of investment at $107. On week 2 I will buy BTC. long futures worth 2*125 at the market price, on week 3 I will buy 3*125 BTC long futures worth the market price... On week 52 I will buy 52*125 BTC long future worth the market price.
In that manner, I'll limit the downside risk by having the dollar cost average price.
Despite I have not a single idea what might be the price for 1 BTC in 52 weeks, by the end of the challenge, I'm looking to hold a long Bitcoin perpetual future worth about 7 BTC.
Assuming the BTC price stays the same as today ($26,818) after one year, and market volatility says the same - I could sell 7 call options with monthly expiration to collect in premium about $1,000 for every call or about $7,000. To cover such a position I would be required to provide collateral of about $21,000
During the road, I will sell call options to boost income. I will start selling once there will be at least 0.01 BTC covered by bitcoin futures. I will sell call options above buy price. In case call options will get excersised I will close the future and start over.
Let's see, will I be able to boost my total investment by using leverage and call options. I'll keep you posted!