Constantinople Speculative Trade Thesis

6 min readJan 4, 2019


#Ethereum #RiskManagement #DigitalAssets #Derivitives

Let’s discuss this upcoming Ethereum Fork on January 16th: Constantinople. This forking event could be a major catalyst for volatility in the ETH market. In these types of structural events there is always uncertainty that could cause tumultuous price action. This can create potential opportunities for profit through a speculative trade via options. Additionally, there is an increased need for RISK MANAGEMENT for those who hold ETH in their corporate treasuries.

In yesterday’s BitOoda Morning Report (1/3/2019) we gave our thoughts on purchasing a Fence (aka a Risk Reversal) to properly deploy defensive RISK MANAGEMENT measures. Today, we want to talk about a speculative structure that can magnify PNL to traders who are ACTIVE scalpers in crypto markets. We are of the opinion that volatility (really GAMMA) in the January (expiring 1/25/2019) is undervalued with this POTENTIAL catalyst event in the near future.

1) Without taking a directional view, buying Straddles is the most efficient way to get long GAMMA and could give you the opportunity to scalp potentially choppy market conditions. Potential Exit Strategies are to:

  • Not having a constructive delta view, one should GAMMA hedge the options position, and with that, timing is key. If you can capture a GAMMA scalp BEFORE the fork date due to a price move from ANTICIPATION, and then capture a second GAMMA Scalp AFTER fork date from the REACTION, you could lock in some profits:
  • At this point you can sell-to-close the Long Straddle and get back any remaining premium from the options structure
  • Or ride out the options to expiration and seek a settlement as far away from the strike as possible.

2) If you have a BULLISH view on the direction of ETH after this catalyst, we think that the recommendation should be to buy ATM Calls. Potential Exit Strategies are to:

  • Simply sell-to-close the Calls you are long
  • GAMMA Hedge with ETH and lean your delta in the direction you are biased in that moment
  • Sell the new ATM Calls (ie. If you purchase the $150 Calls and we rally $20’s, then you would sell the $170 Calls, legging into this Call Spread for free or even potentially a credit).

3) If you have a BEARISH view on the direction of ETH after this event, we think that the recommendation should be to buy ATM Puts. Potential Exit Strategies are to:

  • Simply sell-to-close the Puts you are long
  • GAMMA Hedge with ETH and lean your delta in the direction you are biased in that moment
  • Sell the new ATM Puts (ie. If you purchase the $150 Puts and we sell-off $20’s, then you would sell the $130 Puts, legging into this Put Spread for free or even potentially a credit).

When we broker these options, we think that the trade should be executed bilaterally under an ISDA Agreement. All of our brokers here at BitOoda have their Series 3 License, and we submit these trades into ICE Trade Vault to act in compliance with NFA rules and regulations. If you have interest in executing one of these strategies, contact us IMMEDIATELY!!!


Tim Kelly
Founder and CEO

Brian Donovan
Executive VP of Institutional Sales

Dr. Ilya Kurland
Chief Derivatives Strategist

About BitOoda

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