$ 540 million worth of options expiring tomorrow in favor of ETH’s $ 5,000

Ether bulls are likely very happy with the 368% rally in 2021, and it doesn’t look like a day has passed without a new all-time high (ATH).

Even if Ether is well on its way to hitting $ 5,000, there are still concerns about the network’s ability to absorb strong demand from the DeFi and NFT sectors.

Another potential hurdle is the U.S. Treasury Department’s report on stablecoin regulation publication On November 1, the report highlighted the need for Congress “to ensure adequate federal oversight on a consistent and comprehensive basis.”

In addition, competing networks offer interoperability with large DeFi projects that are being adopted in terms of both Total Value Locked (TVL) and market share in smart contracts. For example, Solana (SOL) achieved a new ATH of USD 247 today, outperforming Cardano (ADA) and USDT and becoming the fourth largest cryptocurrency by capitalization.

According to data from CryptoSlam, Solana NFT market secondary sales hit $ 495 million in the past three months, but the Ethereum blockchain remains the most popular, with NFT secondary sales hitting $ 1.76 billion in October.

Ether price chart | Source: TradingView

By managing to stay one step ahead of the competition and creating a way to solve the scalability problem by switching to a proof-of-stake (POS) network, Ethereum has attracted a number of major investors. These include Dallas Mavericks owner Mark Cuban, the Houston Fire Department Retirement and Relief Fund, and billionaire Barry Sternlicht.

The expiration of a $ 540 million Ether option on November 5th could have been an undisputed victory for the Bulls, but it wasn’t a few weeks ago.

Ether Options OI recap for November 5th | Source: Bybt

300bn put options, however, the 0.8 call-to-put ratio is wrong as the recent rally is likely to undo most bearish bets.

For example, if the price of Ether is still above $ 4,500 at 3:00 p.m. on November 5th, only $ 1.5 million worth of put options will be available when they expire. The right to sell ether for $ 4,570 has no value if it trades above that price.

Cops are fine, ethers over $ 4,500. to keep

Here are the four most likely scenarios for the option’s expiration date of $ 540 million on November 5, 2021. The imbalance in favor of each represents a theoretical gain. In other words, the number of active buy and sell options varies depending on the expiry price Sales contracts:

• From $ 4,300 to $ 4,400: 6,870 buy orders vs. 6,000 sell orders. The net result is a balance between the bulls and the bears.
• From $ 4,400 to $ 4,600: 13,750 buy orders vs. 350 sell orders. The net result is $ 60 million in favor of call options (bulls).
• From $ 4,600 to $ 4,700: 18,500 buy orders vs. 50 sell orders. The net result is $ 85 million in favor of call options (bulls).
• Over $ 4,700: 22,800 buy orders vs. 0 sell orders. The net result was complete dominance by the bulls with a profit of $ 107 million.

This rough estimate takes into account calls used in bullish strategies and only places calls in neutral to bearish trades. However, this simplification does not imply more complex investment strategies.

Bears need a 6% price correction to reduce losses

The only way for the bears to avoid losses on tomorrow’s expiration date is to pressurize the price of ether to drop below $ 4,400, a 6% decrease from its current level of $ 4,660. So unless some related news or event is announced before the weekly options expire, the bulls are likely to make $ 85 million or more.

Currently, options market data points to a significant advantage of call options, leading to bullish bets on Ether, and this raises expectations of a rally to $ 5,000.

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