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The SEC has returned S-1 forms to ETF issuers with minor comments, requiring refiling by July 8 before trading can begin. Technically, ETH shows bullish momentum after breaking from a key trend line, but may face resistance at $3,700.
Call Butterfly Spread
The proposed strategy is a Call Butterfly Spread strategy. A Butterfly Spread with Calls is a three-part strategy that is created by buying one Call at a lower strike price, selling two Calls with a higher strike price and buying one Call with an even higher strike price.
You can consider executing this strategy if you are eyeing upward movement in ETH prices.
Trade Structure
(OTM Call) Buy 1x ETH-12JUL24-$3,600-C @ $87
(OTM Call) Sell 2x ETH-12JUL24-$3,700-C @ $59
(OTM Call) Buy 1x ETH-12JUL24-$3,800-C @ $39
Target: Spot level < $3,700
Payouts
Maximum Profit: $92/ETH
Debit of Strategy: $8/ETH
Why are we taking this trade?
The U.S. Securities and Exchange Commission (SEC) has returned the S-1 forms to prospective ETF issuers with light comments. Here are the key updates:
- Comments from the SEC: Issuers are required to address these comments and refile their forms by July 8.
- Next Steps: One more round of filings is anticipated before the ETFs can start trading.
The S-1 forms are part of a two-step process for the ETFs to go live. The first step involved the approval of issuers’ 19b-4 forms in May, ahead of a key deadline. However, the S-1 forms are not bound to any specific deadline, and their approval depends on how quickly the SEC can review them.
Technical Analysis of ETH
On the technical front, ETH has been following a trend line, as illustrated in the attached 4-hour chart. The recent breakout from this trend line indicates a bullish momentum, especially since it has surpassed the pivotal level of $3,480. However, ETH can face a significant resistance at $3,700, because this pivot pushed the prices down to around$3,230 , hence it may pose a challenge for further upward movement.
For traders, looking to capitalize on the anticipated bullish momentum in ETH, implementing a Call Butterfly Spread strategy could be advantageous.
To execute this approach, traders can purchase a Call option with a higher strike price (e.g., $3,600) while simultaneously selling double the quantity of Calls at a higher strike price (e.g., $3,700) and buying a Call at an even higher strike price (e.g., $3,800).
If the Ethereum price is at $3,700 when the options expire on July 12th, traders will achieve maximum profit from this strategy.
In case of a market downturn, the potential loss is limited to the initial debit of $8.
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.
