Ethereum options bullish trading strategy with no liquidation risk

The Ethereum (ETH) market has been in the doldrums for the past two months, and even the most optimistic trader will have to concede that ETH is unlikely to break above $4,400 for the next few months.

Of course, it is not uncommon for traders to still expect the market to retest the $4,870 ATH zone, but in reality this is unlikely.

 Source: TradingView

Despite the current downtrend, there is still reason to be mildly optimistic over the next few months and using a “correct long with call” strategy can yield positive results.

Options strategies that allow investors to set upside limits

The options market offers more flexibility to create custom strategies with two tools available. Calls, which protect the buyer if prices rise, and put options have the opposite effect. Traders can also sell derivative products to create unlimited financial exposure, similar to futures.

Profit from Ether Options Strategy | Source: Deribit Position Builder

This long-term price strategy is set for March 25th and uses a slightly bullish range. The same structure can be applied to bearish predictions as well, but this analysis assumes that most traders are looking for upward movement.

Ether was trading at $2,677 at the time of the review, but the same outcome would occur at any price.

The first trade required buying 5.14 ETH worth $3,000 with a call option to create positive exposure above that price. After that, capped gains above the $3,500 zone, the trader needs to sell 4.4 ETH of a $3,500 buy order.

To complete the strategy, the trader needs to sell 6.65 ETH of a $4,000 buy order, limiting the upside potential above this price. Finally, protecting against a callout at $4,500 for 5.91 ETH is essential to limit losses if Ether’s price suddenly spikes.

This strategy aims for a win/loss ratio of 3.2:1

This strategy sounds complicated, but the required margin is only 0.175 ETH, which is also the maximum loss. Traders will see a potential net gain with Ether trading between $3,100 (up 15%) and $4,370 (up 63%).

Traders should keep in mind that they can also close the position themselves before the March 25 expiration. With this strategy, the maximum profit between $3,500 and $4,000 is 0.56 ETH, more than three times the potential loss.

Unlike futures trading, this strategy gives security to holders as there is no risk of liquidation. It is also important to note that most derivatives exchanges accept orders with contracts as low as 0.10 ETH, meaning traders can build a similar strategy with a smaller amount of capital.

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