Options Strategy Review: ETH Bear Call Spread
Ethereum – Aug 31, 2025
1. Strategy Recap (Previous Blog Reference)
Link to the earlier blog post where the strategy was designed.
Quick summary: Bearish bias on ETH due to downtrend on 15-min and 1-hour charts, with EMA stack showing 20 > 50 > 100 > 200 downward. Support at $4,374.38, resistance at $4,419.72. Option chain showed highest Put OI at 4,350 (69.11K) and Call OI at 4,250 (100.87K), with high IV. Selected strategy: Bear Call Spread (Sell 4,250 Call at $62.14, Buy 4,350 Call at $15.27, net credit $46.87).
2. Market Outcome
After initiating the trade on Aug 30, ETH price broke upwards contrary to the bearish expectation. It moved from around $4,374 support to $4,478.82, breaking the resistance at $4,419.72. This represented a bullish breakout with increased volatility, no significant OI shift downward, and the price now above key EMAs on multiple timeframes (15-min showing uptrend, 1-hour mixed with oversold RSI at 21.20, daily in strong uptrend). No false breakout observed; instead, a steady climb with minor pullbacks.
Updated Charts:
15-min Chart: Price rose to $4,483.28, above EMAs (20: $4,474.13, 50: $4,460.91), RSI at 63.38 indicating momentum.
1-hour Chart: Price at $4,482.62, above 20 and 50 EMAs but below 200, RSI oversold at 21.20 suggesting potential bounce continuation.
Daily Chart: Price at $4,482.18 (up 2.41%), well above all EMAs in a bullish trend, Stoch RSI low at 7.38/10.96.
3. Strategy Performance
Entry prices: Sold 4,250 Call at $62.14, Bought 4,350 Call at $15.27 (net credit $46.87).
Current prices (mid): 4,250 Call at ~$270.15, 4,350 Call at ~$198.35 (net debit to close ~$71.80).
P&L: $46.87 (credit received) - $71.80 (debit to close) = -$24.93 (loss in USD, assuming 1 contract basis; scaled to lot size 0.1 ETH: -$2.493).
Maximum drawdown faced: Current loss of $24.93, approaching half of max loss potential ($53.13).
Comparison of Expected Payoff vs Actual Outcome: Expected max profit $46.87 if ETH below $4,250; actual partial loss due to price rising to $4,478, exceeding breakeven ~$4,297. With 4 days to expiry, theta decay could mitigate if price stabilizes, but delta exposure hurt the position.
4. Learning & Observations
The chart analysis did not hold true; the anticipated pullback and bearish continuation failed as price broke resistance upward, possibly due to broader crypto market momentum or external factors like positive sentiment.
OI data was misleading; initial clusters at 4,250 Call and 4,350 Put suggested resistance/support, but as price rose, OI shifted higher (now highest Put OI at 4,350 with 591.64K, but Calls dispersed with 4,700 at 1.29M), indicating unwinding or new builds at higher strikes.
No clear psychological bias or execution mistake; the entry trigger (pullback to 4,250 with Stoch RSI below 40) was met, but market reversal was swift.
5. How to Re-Strategize
Since the trade failed: To reduce loss, consider rolling the spread upward (e.g., close current and open new Bear Call at 4,500/4,600) for additional credit, or add a hedge like buying a Put (e.g., 4,400 Put) to create a modified condor. Alternatively, close the position now to cap loss at -$24.93 rather than risk max loss if price continues up.
Suggest alternative strategy: Switch to a Bull Call Spread (Buy 4,450 Call, Sell 4,550 Call) to align with current bullish momentum, or a simple long Call if conviction is high.
6. Forward View
Next possible trade setup: Bullish continuation on daily chart with price above EMAs and potential oversold bounce on 1-hour RSI. Watch for support at $4,450 and resistance at $4,550.
I'll wait for confirmation (e.g., Stoch RSI crossover above 20 on 1-hour) before re-entering immediately with a bullish strategy.
7. Metrics Snapshot
| Metric |
Value |
| Strategy Name |
Bear Call Spread |
| Max Profit |
$46.87 |
| Max Loss |
$53.13 |
| Actual P&L |
-$24.93 |
| Win/Loss Ratio (Cumulative) |
0/1 (this is the first in series; tracking starts here) |
8. Disclaimer
Options trading involves significant risk and is not suitable for every investor. Please ensure you understand the risks involved and consult with your financial advisor before participating. As per SEBI guidelines, past performance does not guarantee future results. Trade responsibly.
