Ether hits new ATH just before $ 1.25 billion options expire today
Ether has rallied over 950% to a new all-time high (ATH) in 2021 and has no intentions to stop. This can also be seen in the extremely bullish bets on the option expiration of $ 1.25 billion today (Oct. 29). However, this phenomenon is not only reserved for cops.
The right to obtain ether at a fixed price in the future is not cheap. On September 4, a $ 5,000 ether call option for the monthly expiration in October was trading at 0.082 ETH or $ 320. Unfortunately, these options are now worthless to the cops.
Gas fees on Ethereum transactions remain above $ 25, which benefits the blockchains of the competition with their own DeFi and NFT markets. Despite these high fees, Ethereum’s smart contract network still holds 80% or more of the total blocked value (TVL) and trading volume on the decentralized exchange (DEX).
Ether price chart | Source: TradingView
The uptrend that began on September 21st has set Ether price on its way to break its ATH of $ 4,380 in just a few weeks.
Additionally, Ether cops will be happy to hear that the Altair upgrade from ETH 2.0 was successful, with 99% of the nodes upgraded. This is the first upgrade since Beacon Chain went live in December 2020, and key changes include support for lightweight nodes and increased penalties for offline validators.
Ether bulls are too optimistic
Based on bullish expectations regarding Bitcoin Exchange Traded Funds (ETF) admission, it is now understandable why the bulls have a 55% stake at $ 4,500 or more. However, as the option expires, these call options quickly lose value.
The expiration date of the October options will be a test of strength for the bears as any price above $ 4,000 would mean the bulls would have an advantage of $ 205 million or more.
Ether Options OI recap for October 29th | Source: Bybt
As the data above shows, the bears are betting $ 535 million on the option expiring today, but it looks like they have been taken by surprise as 96% of put options are likely to become worthless.
In other words, if Ether is still above $ 4,100 today at 3:00 p.m. KST, only $ 12 million in neutral to bearish put options will be activated.
Bulls have few reasons to stay above $ 4,200
Here are the three most likely scenarios for the October expiration: An imbalance in favor of one of the parties represents a theoretical profit. In other words, the number of active buy and sell contracts varies depending on the expiry price:
- From $ 3,900 to $ 4,000: 35,100 buy orders vs. 9,800 sell orders. The net result is $ 100 million in favor of call options (bulls).
- From $ 4,000 to $ 4,200: 54,900 buy orders vs. 3,600 sell orders. Net income is $ 205 million in favor of call options (bulls).
- Over $ 4,200: 66,300 buy orders vs. 600 sell orders. Net income is $ 275 million in favor of call options (bulls).
This rough estimate assumes that calls are only used in bullish bets and are used in neutral to bearish trades. However, investors could have used a more complex strategy that often involves different expiration dates.
Bears need a 7% correction to reduce losses
In either scenario, the bulls have absolute control over the expiration of the options on October 29th and have good reason for them to keep the price above $ 4,200. On the flip side, the bears need a 7% corrective move from $ 4,270 to below $ 4,000 to avoid losses of $ 205 million or more.
However, traders must be aware that the attempts by sellers to put pressure on prices during the bull run are enormous and often ineffective. In addition, data from the derivatives market suggests that a significant short-term advantage of call options will continue to drive bets bullish for the week ahead.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
According to Cointelegraph