Tomorrow (Friday, 26 Aug 21) $800 million worth of ethereum options will expire. Is anyone overconfident here?
Bulls are nervously biting their hooves
Ether (ETH) is about to face the expiration of $820 million worth of monthly options tomorrow. This will be the first time that options targeting $3,000 and above will have a real chance to pick up a fight. Did the bulls miss a good opportunity to dominate the expiration dimension in this market? Were growth-minded investors thus too optimistic about ETH’s price potential?
It’s interesting why $140 million in call options (ranging from neutral to bullish) were embedded between $3800 and $8000. As the monthly expiration approaches, it looks more and more likely that these instruments will become worthless.
What is currently affecting the price of ethereum?
The Ethereum network continues to struggle with overloads and high transaction fees(up to $20 and higher). Furthermore, the continued growth of the non-convertible token industry and decentralized finance is putting further strain on the network.
Perhaps some of the new capital that was supposed to raise the price of Ether has gone to competitors that have recently presented excellent performance. Cardano (ADA), whose price has risen quite significantly recently, is a case in point. ADA investors are expecting the long-awaited smart contracts to be launched on September 12.
Another Ethereum competitor in the smart contracts aspect, Solana (SOL), captured a third of the inflows into cryptocurrency investment products over the past week (CoinShares “Digital Asset Fund Flows Weekly” data).
Finally, second-tier scaling solutions such as<a href=”https://bithub.pl/poradniki/przewodnik-krok-po-kroku-po-zdecentralizowanych-finansach-bez-oplat-za-gas-w-ethereum-z-polygon/” target=”_blank” rel=”noopener
) to scale projects in the SDK.
A glance at the structure of Friday’s expiry in the ETH options market
It is worth noting the dominance of the $3,000 expiry level, which includes 30,900 ETH options contracts, with a total value of 100 million in terms of open interest.
number of ETH options with expiration date 27 August2021; source:Bybt
Initial call-to-put analysis shows a slight predominance of call instruments (neutral to bullish), with 13% more open positions. The bears seem to have been caught unawares, as 83% of their bets were placed at $2900 or lower.
The key level for bearish players in the options market is therefore the $2900 per ETH limit. Almost half of the call options (from neutral to bullish) have expiration prices set at $3500 or higher. If the ETH price falls below this price on Friday, these instruments will become worthless. The expiration of the options will take place at 10:00 our time.
As the deadline approaches, the bears will try to minimize their losses, and luckily for them, the trap for a favorable price move doesn’t look particularly relevant for the bulls.
It is worth considering now, what about September? Given the arguments articulated above, should ETH growth-minded investors think twice before opening a position in the ranges involved?
From the Editor
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