How professional Ethereum traders place bullish ETH price bets while limiting losses

Being bullish connected Ether (ETH) implicit the past 4 months did not wage disconnected arsenic its terms dropped 44% from $4,600. The decentralized concern (DeFi) applications maturation that fueled the rally faded away, partially owed to web congestion and mean transaction fees of $30 and higher.

The cool-off play tin besides beryllium attributed to excessive expectations arsenic the fee pain mechanism implemented successful August 2021 with the London hard fork. After drastically reducing the regular nett issuance, investors jumped to the decision that Ether would go "ultrasound money."

— sassal.eth (@sassal0x) October 28, 2021

Unfortunately, past shows that "hard money" requires aggregate decades of reliable monetary policy. For example, the Euro currency was launched to the nationalist successful 2002 contempt periods of antagonistic issuing successful 2014 and 2019. Yet, its purchasing powerfulness has failed to clasp crushed against hard assets similar golden oregon existent estate.

Case-Shiller U.S. Home Price Index/EUR (orange, left) & Gold/EUR (blue). Source: TradingView

In airy of the 4-month prolonged underperformance, 1 could bargain immoderate inexpensive ultra-bullish telephone (bull) $4,000 ETH options for May for $68. However, with 75 days near for expiry, likelihood of a 55% rally from the existent $2,570 are slim.

It seems much prudent to stake connected a affirmative terms change, but beryllium much selective of your people range. That is precisely however nonrecreational traders usage the "iron condor" options strategy.

Reduced losses by limiting the upside

A full of 10.2 cardinal ETH person been staked into the Eth2 (consensus layer) deposit declaration and investors look assured astir the proof-of-stake migration. Furthermore, mitigating the Ethereum network's biggest hurdle, i.e. scaling, could undoubtedly origin ETH terms to skyrocket.

Finding a strategy that maximizes gains up to $3,600 by May 27 seems prudent. On the different hand, hedging for a antagonistic 7% show is besides omniscient considering the uncertainty regarding United States President Joe Biden's crypto regulatory efforts.

Even though the enforcement bid signed connected March 9 did not denote immoderate restrictive measures, it undoubtedly laid the groundwork for a much focused national oversight.

In that sense, the skewed "Iron Condor" options strategy perfectly fits specified a somewhat bullish scenario.

Ether options Iron condor skewed strategy returns. Source: Deribit Position Builder

The "Iron Condor" sells some the telephone (bull) and enactment (bear) options astatine the aforesaid expiry terms and date. The supra illustration has been acceptable utilizing the ETH May 27 options astatine Deribit.

ETH nett portion is betwixt $2,600 and $3,800

The investors should initiate the commercialized by shorting (selling) 2 contracts of the $3,000 telephone and enactment options. Then, the trader needs to repetition the process for the $3,200 options.

To support from utmost terms movements, a protective enactment astatine $2,400 has been used. Consequently, 5.20 contracts volition beryllium indispensable depending connected the price.

Lastly, conscionable successful lawsuit Ether's terms rips supra $4,000, the purchaser volition request to get 2.10 telephone enactment contracts to bounds the strategy's imaginable loss.

The fig of contracts connected the supra illustration aims for a maximum ETH 0.63 summation and a imaginable ETH 0.40 loss. This strategy yields a nett net if Ether trades betwixt $2,600 and $3,820 connected May 27.

Using the skewed mentation of the Iron Condor, an capitalist tin nett arsenic agelong arsenic the Ether terms summation is little than 49% by expiry.

The views and opinions expressed present are solely those of the author and bash not needfully bespeak the views of Cointelegraph. Every concern and trading determination involves risk. You should behaviour your ain probe erstwhile making a decision.