On October 1, the cryptocurrency market experienced a 9.5% pump that pushed Bitcoin (BTC) and Ethereum (ETH) to their highest levels in 12 days. US A number of factors have been attributed to price volatility, including the consumer price index, dwindling supply from exchanges, and the creation of a “cup and handle” bullish continuum chart.
Traders are unlikely to find an explanation for the sudden move, apart from gaining investors’ confidence after the September 19 fall that was attributed to contagion fears from China-based property developer Evergrande.
The Ethereum network has been facing some criticism due to transaction costs of $20 or more due to non-fungible token (NFT) sales and decentralized finance (DFI) activity. The cross-chain bridge connecting Ethereum to proof-of-stake (PoS) networks is partly solving the issue, and Friday’s Umbrella Network Oracle Service launch shows just how fast interoperability is progressing.
It is also worth noting that the tough regulations announced by China last week had a positive effect on the volume seen in decentralized exchanges (DEXs). Centralized crypto exchanges including Huobi and Binance announced a service suspension for Chinese residents, and this was followed by a significant outflow of coins
Options markets offer more flexibility for developing custom strategies and there are two tools available. A call option gives the buyer upward price protection, and a protective put option does the opposite.
This long condor strategy is set to expire on December 31st and uses a slightly bullish range.
Ether was trading at $3,400 at the time of reporting, but a similar result could be triggered from any price level.
3-Month Ethereum Price Chart – Source: CoinMarketCap
Creating positive exposure above this price level requires buying a 0.50 contract of $3,200 call options in the first trade. After that, to reduce the profit limit to more than $ 3,840, the trader needs to sell options contracts for 0.42 ETH calls. To further limit gains beyond $5,000, the other 0.70 call option contracts must be sold. For the strategy to work, the trader needs to buy a 0.64 call option contract in security above $5,500 if the price of Ether skyrockets.
The strategy may sound complicated to execute, but the margin required is only 0.0314 ETH, which is also the maximum loss. Potential net profit occurs when Ether trades between $3,420 (up 3.6%) and $5,390 (up 63.3%).
Over 90 days until the expiration date, this strategy gives the owner peace of mind because there is no risk of termination like future trading.