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Saturday, April 17, 2021

Ethereum Might Tilt Its Options Expiry Towards Bulls

The prices of Ethereum might be in for a correction- as investors haven’t been able to find any short-term resolution to the fee prices. The proposal number EIP-1559 will be packaged along with the London upgrade- which has been said to change the very structure of gas fees. Nevertheless, most traders would have to deal with a raging amount of fees until that point. 

Ethereum Might Look Towards Put Options

The block size has been made flexible in the hopes that a more predictable model of fee pricing is brought to the market- but that might just be meant for the upgrade in July. This implies that Ether might be just looking towards an inordinate price pressure. But that’s not all the problems Ethereum is facing- there have been complaints from miners that the new proposal might just reduce their own income by half. This would come up, as the upgrade would burn a large part of the fees to increase scarcity. 

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There is a solution to this. Most professional traders usually have protective put options which would work without reducing the positions they are in. These work especially for those who are staking or farming high yields. Sure, they might be expensive when looked at from a long-term perspective, but they also get their trades offered weekly in many exchanges.

The Ethereum put-to-call ratio favors bears, but there’s more to it 

Contrary to how futures contracts work, most of the options are usually segmented into two divisions. Call options will always allow the purchaser to either gather Ether at a price that is fixed or on the expiry date. More often than not, the options on Ethereum are used on arbitrage trades that are neutral- or to finance bullish strategies. 

On the other hand, Ethereum also uses put options as the best protection from price swings that are negative. 

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