{"id":294246,"date":"2021-07-08T22:44:19","date_gmt":"2021-07-08T19:44:19","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/bullish-on-ethereums-london-hard-fork-heres-an-options-strategy-pro-traders-use\/"},"modified":"2021-07-08T22:44:19","modified_gmt":"2021-07-08T19:44:19","slug":"bullish-on-ethereums-london-hard-fork-heres-an-options-strategy-pro-traders-use","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/bullish-on-ethereums-london-hard-fork-heres-an-options-strategy-pro-traders-use\/","title":{"rendered":"# Bullish on Ethereum\u2019s London hard fork? Here\u2019s an options strategy pro traders use"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3d5379504e2\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3d5379504e2\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/bullish-on-ethereums-london-hard-fork-heres-an-options-strategy-pro-traders-use\/#Trading_options_can_help_investors_avoid_liquidations\" >Trading options can help investors avoid liquidations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/bullish-on-ethereums-london-hard-fork-heres-an-options-strategy-pro-traders-use\/#The_prize_is_3-to-1_gains_with_limited_downside\" >The prize is 3-to-1 gains with limited downside<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Bullish on Ethereum\u2019s London hard fork? Here\u2019s an options strategy pro traders use <\/strong>&#8221;<\/p>\n<div class=\"post-content\" data-v-128018ef>The Ethereum network will undergo a major upgrade on Aug. 4, as the long-awaited London hard fork is expected to launch at block 12,965,000. The transition is part of a roadmap leading to the Ethereum 2.0 release, which aims to migrate the network to a proof-of-stake consensus mechanism.<\/p>\n<p>By no longer depending on the intense energy-consumption mining, the main goal is to drastically increase the network&#8217;s capacity by using parallel processing, also known as sharding. <\/p>\n<p>The upcoming London upgrade will implement the critical Ethereum Improvement Proposal EIP-1559, making Ether (ETH) gas costs more predictable. This controversial change includes a transaction fee burn process which could potentially turn Ether into a deflationary asset.<\/p>\n<p>For the last month, Ether&#8217;s price has been in a bearish rut even though the price recovered well from the drop to $1,500, but traders are still wary about opening positions. For the current type of price action, options strategies provide excellent opportunities for investors with a narrow-range target for an asset. <\/p>\n<p>For example, using leveraged futures contracts could be a solution for a scenario where one expects a 20% price increase, but limiting the downside would require a tight stop loss. In a nutshell, the risk-reward usually doesn&#8217;t pay off on volatile markets. <\/p>\n<p>Let&#8217;s investigate how the Long Butterfly options strategy can give traders an edge in tightly wound markets. <\/p>\n<h2><span class=\"ez-toc-section\" id=\"Trading_options_can_help_investors_avoid_liquidations\"><\/span>Trading options can help investors avoid liquidations<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Using multiple calls (buy) options can create a strategy that allows gains that are 3 times higher than the potential loss. The long butterfly strategy allows a trader to profit from the upside while limiting losses. <\/p>\n<p>It is vital to remember that all options have a set expiry date, and as a result, the asset&#8217;s price <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>reciation must happen during the defined period.<\/p>\n<p>Below are the expected returns using Ether options for the Aug. 27 expiry, but this strategy can also be applied using different time frames. Although the costs will vary, the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a> efficiency will not be affected.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-07\/40c0b08e-033a-411d-8b11-1b2a8d872673.png\"><figcaption style=\"text-align: center;\"><em>Profit \/ Loss estimate. Source: Deribit Position Builder<\/em><\/figcaption><\/figure>\n<p>This call option gives the buyer the right to acquire an asset, but the contract seller receives (potential) negative exposure. This is why the Long Butterfly strategy opens a short position using the $2,800 call option.<\/p>\n<p>To execute the order, the investor buys 3 Ether call options with a $2,400 strike while simultaneously selling 4 of the $2,800 calls. To finalize the trade, they have to buy 1 Ether of the $4,000 call options to create upside protection.<\/p>\n<p>Derivatives exchanges price contracts in ETH terms and $2,366 was the price when this strategy was quoted.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_prize_is_3-to-1_gains_with_limited_downside\"><\/span>The prize is 3-to-1 gains with limited downside<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In this situation, any outcome between $2,485 (5% gain) and $3,620 (53% gain) yields a net profit\u2014for example, a 15% price increase to $2,720 results in a 0.25 Ethernet gain.<\/p>\n<p>Meanwhile, the maximum loss is 0.105 Ether if the price is below $2,400 or above $4,000 on Aug. 27.<\/p>\n<p>The appeal of the butterfly strategy is a potential 0.32 Ether again at $2,820, which is 3 times more significant than the maximum loss. Overall, the trade yields a much better risk-to-reward outcome versus leveraged futures trading when considering the limited downside. <\/p>\n<p>Options strategies involving multiple strikes provide a decent upside for bullish traders seeking exposure to Ethereum&#8217;s London hard fork on Aug. 4. The only upfront fee required is 0.105 Ether, which is enough to cover the maximum loss. <\/p>\n<p><em>The views and opinions expressed here are solely those of the <\/em><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/noshitcoins\"><em>author<\/em><\/a><em> and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.<\/em><\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/bullish-on-ethereum-s-london-hard-fork-here-s-an-options-strategy-pro-traders-use\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Bullish on Ethereum\u2019s London hard fork? Here\u2019s an options strategy pro traders use &#8221; The Ethereum network will undergo a major upgrade on Aug. 4, as the long-awaited London hard fork is expected to launch at block 12,965,000. The transition is part of a roadmap leading to the Ethereum 2.0 release, which aims to&#8230;<\/p>\n","protected":false},"author":1,"featured_media":294247,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDcvNzJkY2Q3OWYtNzFjNi00Zjc3LWI3NzItZGRjNWI4NWE3ZjJkLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74867,74863,74860,75012,82402,74891,75326,81210,75846,78425,74939,103657,3123,18981,73785],"class_list":["post-294246","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-altcoin","tag-cryptocurrencies","tag-cryptocurrency-exchange","tag-derivatives","tag-ether-price","tag-ethereum","tag-ethereum-2-0","tag-ethereum-options","tag-futures","tag-hard-fork","tag-market-analysis","tag-upgrade","tag-leverage","tag-london","tag-markets"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/294246","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=294246"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/294246\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/294247"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=294246"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=294246"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=294246"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}