Matrixport suggests relative value transactions to buy Ethereum call options
It is reported that according to Matrixport, a cryptographic service provider, it is time to conduct relative value transactions. Traders can now buy Ethereum …
It is reported that according to Matrixport, a cryptographic service provider, it is time to conduct relative value transactions. Traders can now buy Ethereum call options and provide funds for them by selling Bitcoin call options, with considerable profit potential. Markus Thielen, director of research and strategy at Matrixport, said in a report to clients on Tuesday, “This allows traders to buy high-volatility assets (Ethereum) at the price of low-volatility assets (Bitcoin).”
Research director of Matrixport: The current market can sell Bitcoin call options to buy Ethereum call options
Interpretation of the news:
According to a recent report by Matrixport, a cryptographic service provider, it is now time for traders to conduct relative value transactions by buying Ethereum call options and providing funds for them by selling Bitcoin call options. Markus Thielen, the director of research and strategy at Matrixport, believes that this strategy could offer considerable profit potential to traders.
Relative value trading, also known as arbitrage, involves simultaneously buying and selling correlated instruments to profit from the differences in their prices. In this case, traders can take advantage of the price differences between Bitcoin and Ethereum, two of the most popular cryptocurrencies in the market.
Bitcoin and Ethereum have different levels of volatility, with Bitcoin being perceived as the more stable of the two. According to Thielen, buying Ethereum call options at the price of low-volatility assets like Bitcoin could lead to significant profits, as Ethereum’s volatility has been traditionally higher.
Call options, in general, are financial contracts that give the buyer the right, but not the obligation, to purchase an underlying asset, such as a stock or a commodity, at a predetermined price within a specified time frame. Call options can be profitable if the price of the underlying asset rises above the predetermined price, as the buyer can purchase the asset at a lower price and then sell it for a higher price in the market.
Thielen’s suggestion for traders is to fund their Ethereum call options by selling Bitcoin call options. By doing so, traders can benefit from both the price differences between Bitcoin and Ethereum, as well as the potential profits from the call options themselves.
In conclusion, Matrixport’s suggestion for traders to conduct relative value transactions by buying Ethereum call options and selling Bitcoin call options could offer significant profit potential, given the historical volatility differences between the two cryptocurrencies. However, traders should be aware of the risks involved with trading derivatives such as options and should conduct proper risk management strategies.
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