Ethereum’s long-awaited transition away from proof-of-work (PoW) mining has recently suffered another delay and is expected to occur in the second half of 2022.
Ethereum developer Tim Beiko stated on April 13 that “it won’t be June, but likely in the few months after. No firm date yet, but we’re definitely in the final chapter of PoW on Ethereum.”
An automated increase in mining difficulty designed to make PoW mining less attractive is set to become active around May. Known as the “difficulty bomb,” it will eventually make blocks “unbearably slow,” forcing the upgrade to a proof-of-stake (PoS) network.
Such news might have negatively impacted Ether’s (ETH) price, but it creates an immense opportunity for those betting on the efficiencies and potential gains of faster and cheaper transactions.
Even though one could use futures contracts to leverage their long positions, they risk being liquidated if a sudden negative price move occurs ahead of the network upgrade. Consequently, pro traders will likely opt for an options trading strategy like the “long butterfly.”
By trading multiple call (buy) options for the same expiry date, one can achieve gains 3.2 times higher than the potential loss. An options strategy allows a trader to profit from the upside while limiting losses.
It is important to remember that all options have a set expiry date, and as a result, the asset’s price appreciation must happen during the defined period.
Using call options to limit the downside
Below are the expected returns using Ether options for the Sept. 22 expiry, but this methodology can also be…