BTC has erased over half of its gains made since Dec 18th in the last four trading days on large selling volume, most recently the last $100 down move on Sunday around 11 AM EST. As we said Friday afternoon, we had been waiting for an indication for the next $1,000 move from a spike in volume. It is clear that direction is down.
Today will be my final update on my ETH Spec Trade report originally written on 1/4, and first updated on 1/10:
- At this point you can sell-to-close the Long Straddle and get back any remaining premium from the options structure On the date of this report the F $150 straddle was worth $30 — Today it is still ~$30 [Break-even]
- Or ride out the options to expiration and seek a settlement as far away from the strike as possible you would need a further selloff in ETH for the $150 straddle to be profitable — this trade will be profitable if ETH settles below $120 — The $150 straddle is worth ~$35 so if you sold out of the options you can make $5 on $30 (16.67% ROI)
- You can under-hedge by only purchasing 50% of the quantity of ETH as you are long the puts. The profits locked in would be 50% of the $20 selloff seen today. Since you paid $15 for the puts, and made $10 on the GAMMA (50% of $20 selloff), you would have locked in 2/3s of the premium spent on the options. As stated above, you want to GAMMA hedge AFTER the fork date from the REACTION of ETH price. This under-hedge gives you a chance to purchase the second 50% of ETH at a lower price and potentially increase profits compared to the $5 locked in by FULLY HEDGING. Once again, you would still be long PREMIUM from the option you are long — The second 50% of your ETH buys should have been over the weekend on the selloff, roughly paying $115 for your ETH. The average buy on your total GAMMA hedge should then be $120. This entire trade could have made $30 on the hedge less $15 on the Jan $150 puts = $15 gain (make $15 on $15 = 100% ROI).
Below is an update of the market made on the ETH H (3/29/2019) 100/250 Fence which was the structure we recommended for our RISK MANAGEMENT Report published on 1/3/2019:
On 1/3/19: -8/8; Worth flat
On 1/10/19: 0/16; Worth 8 to the Put
Today, on 1/14/19: 4/20; Worth 12 to the put
Finally, we have been watching the ETH/BTC spread closely, and witness a price run up from .035 to just above .04 over the last few weeks. Fundamentally, we have expressed our view on this spread almost a month ago:
BitOoda thoughts on Ethereum 12/7/2018:
We mentioned in our 12/17/2018 Morning Summary that while Ethereum was in a bear market with other crypto-assets it is in a more mature stage than Bitcoin. That made us look at a relative value trade of ETH/BTC pair. Coincidentally, the ratio made a 0.026 low just as we were writing the commentary. There are a lot of historical highs and lows in the 0.026–0.03 range that seem to provide a support/resistance level. The pair has rallied significantly in a short period of time to 0.035 generating a nearly 35% return in a matter of days.
We believe that to a trader who is constructive on the space there is still a lot of room to the upside with 0.05 level providing the first significant resistance.
A more cautious approach would be to wait for a retest of the 0.026 level before getting long the pair.
This is a lower beta way of getting long a crypto-recovery with most of the broader marketpace risk hedged away.
Seeing this weekends price action and selloff in the spread, this could be a decent entry point start accumulating a position. Goodbye for now!