Home News This bullish Ethereum options trade targets $3.1K ETH price with zero liquidation...

This bullish Ethereum options trade targets $3.1K ETH price with zero liquidation risk


The price of Ethereum (ETH) has been trapped in a rut for the past two months, and even the most bullish trader will agree that trading beyond $4,400 in the coming months is unlikely.

Of course, cryptocurrency traders are known for their optimism, and it is not uncommon for them to forecast a new all-time high of $4,870, but this appears to be a stretch.

Despite the present bearish trend, there are reasons to be relatively bullish over the next few months, and a “long condor with call options” strategy could be profitable.

The investor might create upside limitations with options methods

Options markets provide you more freedom to create individual strategies, and there are two types of options to choose from. The protective put option protects the buyer from price increases on the upside, and the call option protects the seller from price increases on the downside. Traders can also sell derivatives to create infinite negative exposure, just like a futures contract.

Ether options strategy returns. Source: Deribit Position Builder

This long condor approach has a slightly bullish range and is set to expire on March 25. A similar structure can be used for negative expectations. However, this scenario assumes that the majority of traders are seeking opportunities to profit.

When the pricing took place, Ethereum was trading at $2,677, but a comparable result can be reached at any price level.

To build a positive exposure over this price level, the initial trade necessitates purchasing 5.14 ETH worth of $3,000 call options. The trader must then sell 4.4 ETH contracts of the $3,500 call to keep winnings below $3,500.

The trader must sell 6.65 ETH contracts of the $4,000 call to complete the plan. Restricting the gains above that price level. Finally, if Ethereum unexpectedly skyrockets, a $4,500 upside protection call for 5.91 ETH is required to limit the losses.

The plan strives for a profit-to-loss ratio of 3.2 to 1

Although the approach appears complex, the required margin is merely 0.175 ETH, which is also the maximum loss. If Ether trades between $3,100 (up 15%) and $4,370, a potential net profit can be realised (up 63%).

Traders should keep in mind that the position might be closed before the expiration date of March 25. The greatest profit in this method is between $3,500 and $4,000 at 0.56 Ether. More than three times the maximum loss.

Because there is no risk of liquidation, unlike futures trading, this method gives the holder peace of mind. It’s also worth mentioning that most derivatives exchanges accept orders as little as 0.10 ETH contracts. Implying that a trader might use a smaller amount to build the same approach.

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