Pro traders may use this ‘risk averse’ Ethereum options strategy to play the Merge

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Traders have been pondering how Ethereum’s upcoming Merge upgrade could shake ETH price up. noshitcoins explains how a “risk averse” options strategy could benefit traders.

) is reaching a make-it or break-it point as the network moves away from proof-of-work mining. Unfortunately, many novice traders tend to miss the mark when creating strategies to maximize gains on potential positive developments.

So why not use inverse swaps? The main reason is the threat of forced liquidation. If the price of ETH drops 19% from the entry point, the leveraged buyer loses the entire investment. Options trading presents opportunities for investors to protect their positions from steep price drops and even profit from increased volatility. These more advanced investment strategies usually involve more than one instrument and are commonly known as"structures."

First, the trader needs to buy protection from a downside move by buying 10.2 ETH put $1,500 options contracts. Then, the trader will sell 9 ETH put $1,700 options contracts to net the returns above this level. Finally, the trader should buy 10 call $2,200 options contracts for positive price exposure.

 

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