Ether (ETH) will hit higher lows until 2021 and the current trend suggests that $ 1,800 could be the bottom for April. Even traders and investors who do not trust technical information became optimistic after Visa launched a pilot program to reconcile US dollar (USDC) coin transactions through the Ethereum network.
Coinbase is quoted in USD for Ether. Source: TradingView
Given that the price of Ether appears to be poised for new yearly highs, there are quite a few investment options out there. Buying and holding is a great strategy as well as going long with 2x leverage. The problem has a downside, as a 20% discount would result in a 40% loss when using a futures contract. Not to mention, there isn’t much room for more influence as it takes a lot of progress.
On the other hand, options strategies provide good opportunities for fixed range traders. For example, for those expecting a moderate 15% rise in prices in thirty days, the Iron Condor strategy provides a 12% gain under the minimum assumptions. This strategy also limits the defect to 10%, regardless of how the asset is performing.
This bullish strategy is to buy 10 Ethers for $ 1,600 and sell the same amount for $ 2,240. To complete the transaction, the buyer will sell 7.5 Ether put options for $ 2,080 and balance them by purchasing 8 Ether contracts at $ 2,880.
Unlike permanent futures contracts (reverse swaps), options have a specific expiration date, so the expected result should come within the specified period.
The Ether (ETH) calendar option below indicates an expiration date of April 30, but this strategy can also be applied to Bitcoin (BTC) or applied to a different timeframe.
Derivatives exchange the price of these agreements on the air, which means that the proposed gains and losses are accounted for in fractions of the air at the expiration date.
Given that Ether is currently trading at $ 1,810, any result between $ 1,790 and $ 2,545 (up 40.6%) provides a net profit. For example, a 15% price increase to $ 2080 yields a net profit of 1.2 Ethereum, or $ 2500.
Meanwhile, the maximum loss for this strategy is 1.04 ETH, which will happen if the price on April 30 is below $ 1600 (12% decline) or above $ 2545.
Iron Condor’s strategy assumes a potential profit of 1.2 ETH, while losses are capped at just $ 1,600 at expiration.
Overall, this conservative strategy provides a much better reward for risk compared to trading leveraged futures contracts due to a limited disadvantage. The initial value (deposit) is 1.04 ETH and this also reflects the maximum potential loss.