View on market
Sol’s chart signals a potential market shift, with $160 now a resistance point. I anticipate a downward movement in SOL, hence considering a bear call spread strategy.
Bear Call Spread
The proposed strategy is a Bear Call Spread. A bear call spread is achieved by simultaneously selling a call option and buying a call option at a higher strike price but with the same expiration date.
You might consider initiating this trade if you believe that SOL can face resistance around $160 levels.
Trade Structure
(OTM Call) Sell 1x SOL_USDC-17MAY24-$160-C @ $4.7
(OTM Call) Buy 1x SOL_USDC-17MAY24-$165-C @ $3.1
Target: Spot level < $160
Payouts
Maximum Profit: $16 per contract
Why are we taking this trade?
As illustrated in the attached 4H SOL chart, SOL currently occupies a pivotal position within the higher time frame(Daily) Flip zone. A flip pattern suggests a potential market direction change, marking a transition from an existing trend to a possible reversal or shift in sentiment . It is often observed as a significant turning point or a potential opportunity for traders to take advantage of the changing market dynamics.
Previously, Sol had been honoring the $160 mark as a crucial support level until April 12th, when it breached this support during a market sell-off, coinciding with the unlocking of locked SOL tokens. This event underscored the influence of traders’ sentiments on SOL’s price dynamics.
Presently, the $160 level has transformed into a notable resistance point for Sol’s prices, likely hindering upward movement. Consequently, traders might contemplate employing a bear call spread strategy to capitalize on the sideways to downward trajectory anticipated for SOL.
To execute this strategy, traders can sell a call option of a higher strike price, eg. $160, while simultaneously purchasing a call option at an even higher strike price, like $165.
In case of market upturn, the maxim loss is limited to $34 , Maximum loss of Bear Call spread = Difference between strike prices of calls ($165 – $160) – Net Credit ($1.6).
Note: Solana Contract Multiplier is 10.
How to take this trade on Deribit?
Step 1: Go to Options books under SOL_USDC & Select expiry.
Step 2: Choose Strike and execute your trade.
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.
