- Financial Options mitigate risk in highly volatile assets.
- Ethereum and Ripple show uncertain technicals - elevated volatility is likely.
- ETH/USD moves to the limit of the critical double bottom level.
The Chicago Mercantile Exchange or CME, has announced the release of Options on Bitcoin futures for Q1 2020 this morning.
The value of the tick will be $25 in the Premium option and $5 in the standard version. The reference asset will be CME Bitcoin Futures, both in price and trading hours.
The possibility of trading Bitcoin using Financial Options facilitates the implementation of new strategies, whether hedging operations, volatility trading or on maturities.
Professional investors widely use financial Options for the large number of trading combinations they allow.
Let's take a quick look at the differences between tools:
- Cash trading only allows you to take advantage of the bullish direction (except inverse ETF). The P&L is directly related to the spot price.
Advantages: You will never receive a margin call, and you will be able to keep your investment indefinitely. Losses cannot exceed the amount invested.
Disadvantages: High capital consumption due to lack of leverage.
- Trading in Bitcoin futures allows you to position yourself on both sides of the market, both bullish and bearish. The P&L is directly related to the spot price.
Advantages: You only have to contribute a part of the notional value of your investment. You can maintain your activity in bear markets. It is a leveraged product.
Disadvantages: Losses may exceed the amount initially invested. Futures have a due date; if you want to keep the investment, you must roll from one contract to another.
- Financial options allow multiple strategies. Options can be bought or sold, both calls and puts. In the Call options, the cost is limited to the premium. Put options, you collect the quoted price, but losses can be unlimited.
Source:quora.com
Advantages: They allow to limit the risk more than any other tool (Calls). The options calculation formula incorporates variables such as time to maturity, volatility, interest rate, etc. You can isolate any of these variables and trade based on them. It is the preferred tool of institutions.
Disadvantages: Losses can be unlimited if you sell Puts. Learning to trade options is complex at all levels.
ETH/BTC Daily Chart
ETH/BTC is currently trading at 0.01986. The SMA100 adds strength to the price congestion support. The apparent weakness is attributable to a final phase of consolidation after the relative highs of 0.023.
Above the current price, the first resistance level is at 0.021, then the second at 0.022 and the third one at 0.023.
Below the current price, the first support level is at 0.019, then the second at 0.018 and the third one at 0.017.
The MACD on the daily chart continues to soften the bearish profile. The MACD on the daily chart continues to weaken the bearish profile. It is already in the negative zone, which will add difficulty to any bullish attempt.
The DMI on the daily chart shows bears descending that it only stops when they reach the ADX line. The bulls are in the opposite situation, and it is probably that in the next few days they will attempt to cross the ADX line upwards.
BTC/USD Daily Chart
BTC/USD is currently trading at $9,029 and finds support above the SMA200 and the EMA50.
Above the current price, the first support level at $9,050, then the second at $8,800 and the third one at $8,500.
Below the current price, the first resistance level is at $9,150, then the second at $9,600 and the third one at $10,600.
The MACD on the daily chart preserves both the slope and the opening between the lines. It seems highly likely that a break above the neutral level of the indicator could happen.
The DMI on the daily chart shows both sides of the market, maintaining previous levels. The bulls will try again to break the bullish ADX line. The bears remain at high levels but do not exceed 20, which indicates the existence of trend strength.
ETH/USD Daily Chart
ETH/USD is currently trading at $180 and is breaking below moving averages.
Above the current price, the first resistance level is at $190, then the second at $195 and the third one at $200.
Below the current price, the first support level is at $180, then the second at $170 and the third one at $160.
The MACD on the daily chart shows a loss of bullish profile just below the bullish zone of the indicator. It is a clear sign of weakness, but it can change quickly due to the very closeness of the bullish side.
The DMI on the daily chart shows how bulls lose trend strength. The bullish side remains above the ADX line, so the bullish momentum continues intact. The Bulls do not react upwards, but they move at levels close to the bulls and may try to attack their position.
XRP/USD Daily Chart
XRP/USD is currently trading at $0.2901 and is losing the critical $0.30 level once again.
Above the current price, the first resistance level is at $0.295, then the second at $0.30 and the third one at $0.31.
Below the current price, the first support level is at $0.29, then the second at $0.285 and the third one at $0.28.
The MACD on the daily chart shows a slight bearish divergence. The indicator is crossed down within a fully flat profile. In the short term, price behavior will tend to decline.
The DMI on the daily chart shows the bulls above the ADX line, thus keeping the bullish momentum active. The bears lose some strength and do not seem to want to take advantage of the apparent weakness of the buyer side.
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