Ether bulls maintain control as $730 million in ETH options expire Friday

Bullish Ether traders have a $109 million advantage in the $730 million in ETH options that expire on May 14.

Ether bulls maintain control as 0 million in ETH options expire Friday


Ether (ETH) launched a rally on April 25 that ended up rising 90%, pushing its price up to $4,200. The non-stop rally was fueled by the phenomenal growth of decentralized financial (DeFi) applications. the total value of DeFi locks exceeded $74 billion, a 51% increase in 18 days.

This rally has been weakening neutral to bearish puts (sells), giving the bulls more incentive to continue rising. a total of $730 million in Ether options will expire on May 14, with the bulls in full control due to the preponderance of calls (buys).

Ether bulls maintain control as 0 million in ETH options expire Friday

Daily DEX trading volume on the Ethernet network / USD Source: DeBank

The decentralized exchange (DEX) also saw a new high in trading volume on May 9, exceeding $5 billion. This is roughly equivalent to Coinbase’s average daily trading volume, which is a 150% increase over the previous month.

At first glance, the numbers look favorable to the shorts

Regardless of the reason for Ether’s rise, options expiring each week have become significant as the volume of open positions has increased. This data means that traders should not ignore the importance of the 176,000 Ether options contracts that will expire on May 14.

Ether bulls maintain control as 0 million in ETH options expire Friday

Open interest in Ether May 14 options by strike price, number of contracts Source: Bybt

As of Friday’s expiration, there were still 76,700 open call (buy) options, currently worth $228 million. Buyers of call options can buy Ether at a fixed price at a determined date in the future. As a result, this instrument is more frequently used in neutral to call strategies.

On the other hand, a put (sell) option provides buyers with the ability to protect against negative price fluctuations. Therefore, this instrument is needed for neutral-to-call strategies, which currently have 99,000 contracts and $371 million worth of open interest on May 14.

Digging a little deeper will give different results

As you can see from the call to put ratio of 0.77, this number initially reflects a bearish situation. However, having the right to sell Ether at $3,200 on Friday didn’t help much.

Only 16,000 Ether puts exist at $3,700 or higher.

That $60 million in open positions seems irrelevant, as there are 45,000 calls at $3,800 or lower. These options are currently worth $169 million, giving the long side a net advantage of $109 million.

Shorts could get little benefit from pushing prices lower

If the shorts manage to push the price below $3,500 by 8:00 a.m. UTC on Friday, this will reduce their disadvantage by $86 million. Therefore, they have an incentive to push the price lower, at least until Friday’s expiration.

In the long run, unless there is pressure from the US regulatory side, a rise in Ether to $5,000 remains a clear target for the bulls.

Investors and market makers are currently watching SEC Chairman Gary Gensler closely, and despite his recent address to Congress, no deadline has been set for establishing a regulatory framework.

Posted by:CoinYuppie,Reprinted with attribution to:
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