As you may be aware, the Constantinople Hard Fork on the Ethereum blockchain has been implemented. So, lets see how traders reacted to this implementation…*crickets*. This could be one of those ‘buy the rumor sell the news’ type scenarios. What you can see in equities markets, is when a positive catalyst event emerges on the horizon, there is some anticipatory buying from speculators to aid a ‘run-up’ into the date of the catalyst. Then, when the moment passes and there is no follow-through, trades exit their long positions taking profits, not getting too greedy.
Two weeks ago, we wrote in our morning piece, “Constantinople — Round 2”, “The ETH H (3/29/19) $125 Call is worth roughly $12. If you can buy at the calls at this price, that would give you a break even up to $137. Viewing this ETH chart, we feel as though it is just ‘air’ up to ~$150. In other words, we don’t believe we shall see any RESISTANCE until that level as a rally could easily gap to that price.”
Within days, our call was spot on, as ETH gapped right to our target price of $150. We wrote our Constantinople Round 2 Follow-Up piece after that run-up pointing out that the ROI on a short term options play (GAMMA) could reap much higher rewards than an outright purchase of the spot price.
Amazingly, some days later, we saw the price of ETH trade up to ~$165, only to be rejected hard and settle down into this range between $130-$140. Since this was a shorter-term trade, one would hope to have sold some DELTAS on these rallies to help capture profits via GAMMA scalping. However, if this opportunity was missed, you would still be sitting on the $125 Calls, that are worth ~$17.50 today, with a small profit.
This event driven trade is now over, and in our eyes, it is difficult to come up with any reasonable thesis to have conviction for ETH to trade higher or lower. We would be of the opinion to close out of this trade, sit tight, and wait for the next trade opportunity patiently.
Which brings us back around to our original point of ‘buy the rumor sell the news’; traders got long into this event, and shall close out of their length if they haven’t done so already. A minor selloff could occur (if it has not yet taken place already).