View on market
Solana recently broke the $175 supply zone, showing bullish momentum, and is now retracing to a key demand zone. If this zone holds, we could see price bounce back.
Call Ratio Spread
The proposed strategy is a Call Ratio Spread. A Call Ratio Spread involves buying a Call option that is OTM, and then selling two Calls of the same expiry, further OTM.
You might consider initiating this trade if you believe that SOL can follow the uptrend from the current levels.
Trade Structure
(OTM Call) Buy 1x SOL_USDC-16AUG24-$170-C @ $6.03
(OTM Call) Sell 2x SOL_USDC-16AUG24-$180-C @ $3.27
Target: Spot level < $180
Payouts
Maximum Profit: $105.1 per contract
Net Credit of Strategy: $5.1 per contract
Why are we taking this trade?
In recent trading sessions, Solana (SOL) has exhibited a noteworthy breakout, generating considerable attention from traders and investors. By breaking through the critical supply zone at $175, Solana has showcased its potential for upward momentum. The supply zone at $175 has been a significant resistance level for Solana, acting as a barrier that previously hindered upward price movement.
Following the breakout, we are witnessing a retracement to the demand zone responsible for the previous upward push. Retracements are common in financial markets and often provide an opportunity for traders to assess the strength of a breakout. Hence, traders can consider deploying a Call Ratio strategy to capitalize on the bullish atmosphere in the underlying.
To implement this strategy, traders can buy a Call option (e.g., $170) and simultaneously sell Calls in double the quantity (2x) of a higher strike price (e.g., $180).
If the price of SOL is $180 when the options expire on August 16th, traders will be at maximum profit from the strategy.
It’s important to note that while this strategy collects an initial credit of $5.1 per contract, significant losses are possible due to the position’s net short Call exposure.
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.
