Enhance Your Crypto Strategy: Selling In-the-Money 1 DTE Call Options on Ethereum

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Are you looking to optimize your crypto trading strategy? Consider integrating the sale of in-the-money (ITM) 1 day to expiration (DTE) call options on Ethereum into your portfolio. 

At TerraMatris Crypto Hedge Fund, we're exploring this approach to potentially enhance returns and mitigate risk. Let's delve into how this strategy works and its potential benefits.

Trade Setup:

To illustrate, let's examine a recent trade executed on February 6, 2024:

  • Long ETH Perpetual Futures: Purchased 0.1 Long ETH-PERP futures contracts at $2,310.
  • Sold 1DTE 0.1 Call Option on ETH: Simultaneously sold a 1DTE 0.1 Call Option on Ethereum with a strike price of $2,300, receiving a premium of $2.4.

Scenario 1: ETH Price Below $2,300 at Expiry

If Ethereum remains below the strike price of $2,300 at the expiry date (February 7, 2024), the options expire worthless. In this case, you retain the premium received from selling the call option. Additionally, the long perpetual futures contract remains open, allowing you to potentially profit from any future price movements in ETH. You can keep selling call options to generate income.

Scenario 2: ETH Price Above $2,300 at Expiry

Should Ethereum trade above $2,300 at expiry, you would need to pay the difference between the spot and strike prices. For example, if ETH expires at $2,325, the difference would be -$2.5. However, with the long perpetual futures contract established at $2,310, you would gain +$1.5 from this position.

After factoring in the options premium received ($2.4), the potential loss from the difference between spot and strike prices (-$2.5), and the gain from the futures contract (+$1.5), the net outcome would be a profit of $1.4. (before comisions and funding fees)


Break Even:

The break-even point for this strategy is crucial to understand. In this case, it would be $2,286.


While selling ITM 1 DTE call options on Ethereum offers potential benefits, it's essential to be aware of the drawbacks. Significant price drops in Ethereum can result in losses, particularly when trading on margin with leverage. Additionally, be mindful of funding fees associated with perpetual futures contracts.


Integrating the sale of in-the-money 1 DTE call options on Ethereum into your trading strategy can offer opportunities for enhanced returns and risk management. By strategically combining options trading with futures contracts, you can capitalize on price movements in Ethereum while mitigating downside risk. However, it's crucial to thoroughly understand the mechanics of this strategy and consider potential drawbacks before implementation.

At TerraMatris Crypto Hedge Fund, we're dedicated to exploring innovative strategies to optimize our trading performance. Join us as we navigate the dynamic landscape of the cryptocurrency market and unlock new possibilities for portfolio growth.