ETH on the Brink: Is a Major Breakout Imminent?

View on market

ETH’s 4-hour chart shows a bullish trend with higher highs and lows, suggesting a potential upward move.

Bull Call Spread

The proposed strategy is a Bull Call Spread. A Bull Call Spread consists of one long Call with a lower strike price and one short Call with a higher strike price. Both Calls have the same underlying and the same expiration date. It is established for a net debit (or net cost) and profits as the underlying price rises.

You may consider taking this trade if you expect ETH price to rise.

Trade Structure

(OTM Call) Buy 1x ETH-22AUG24-$2,700-C @ $32
(OTM Call) Sell 1x ETH-22AUG24-$2,750-C @ $17

Target: Spot level > $2,750

Payouts

Maximum Profit: $35/ETH
Debit of Strategy: $15/ETH

Why are we taking this trade?

Upon examining the 4-hour price chart of Ethereum (ETH), a noticeable pattern of higher highs (HH) and higher lows (HL) has emerged. This formation indicates a bullish trend. Additionally, the price has consistently held around the flip zone at $2,800 level, showing resilience without any significant retracements or fall. Given that ETH is maintaining this price zone and continuing to form higher highs and higher lows, it is reasonable to anticipate a potential upward move in the near term.

Therefore, traders might consider deploying a Bull Call Spread strategy to capitalize on this anticipated price movement based on the above analysis.

To implement this strategy, traders can buy a Call option at a lower strike price (e.g., $2,700) and simultaneously sell a Call option at a higher strike price (e.g., $2,750).

If the price of ETH is at or above $2,750, when the options expire on August 22nd, traders will achieve maximum profit from this strategy.

If the price fails to increase sufficiently, the potential loss is limited to the initial debit of $15.

How to take this trade on Deribit?

Step 1: Go to Combo books under the Strategy tab & Create combo.

Step 2: Click RFQ and send your order to the Combo List.

Step 3: Go to Combo list (ETH), click on your Strategy and execute.

Disclaimer

This report must not be used as a singular basis of any trading decision. The document includes analysis and views of our research team. The document is purely for information purposes and does not constitute trading recommendation/advice or an offer or solicitation of an offer to buy/sell any contract.

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