After reviewing the Ether (ETH) options for June 25th, one might think that traders have become either overly optimistic or extremely bearish. There are currently big bets on prices under $ 1,000 while others target $ 3,800 and above.
A recent report by Coinshares shows that several crypto funds have seen net inflows after record long outflows. The report notes that Ether vehicles saw a total inflow of $ 47 million, increasing its market dominance to 27%.
DeFi growth supports higher ether prices
Another positive factor is that DeFi protocols maintain a Total Value Locked (TVL) of $ 48 billion, despite a significant blow to the sector following the recent Ether price crash.
The 57% increase over the past three months should please even the most optimistic investors, but crypto traders are notoriously exaggerating the situation of the past few weeks. So when Ether fell from its all-time high of $ 4,380 on May 12, traders quickly sought to put protective puts at $ 400.
On the other hand, the eagerly anticipated transition to a proof-of-stake consensus model could be the root of positive expectations. The EIP-1559 improvement proposal, set for the next month, is another important stepping stone, and some retailers have price targets between $ 4,000 and $ 10,000.
There are currently 623,800 ether options contracts expiring on June 25, for a total of $ 1.75 billion in open interest. The neutral to bullish call (buy) options are currently 29% stronger, although this call-to-put ratio uses an equal weight for each strike regardless of its probability.
Bears spent over $ 1 million building their positions
The ultra-bearish put (sell) options at $ 1,600 and below amount to 170,000 ether contracts, representing an open interest of $ 476 million. However, given the approximately three weeks remaining to expire on June 25th, these contracts will each trade below $ 32. The market value of these bearish options is $ 1.2 million.
On the flip side, the bulls have likely exaggerated by buying call options at $ 3,800 and above. These 160,000 ether contracts amount to an open interest of $ 450 million, but considering that their current face value is less than $ 80 each, their market value is $ 5 million.
Therefore, despite similar open interests on both sides, bulls spent more money building their position.
These out of the money options are a great way for option sellers to redeem the premium upfront. The same method can be used for put options of $ 2,100 and call options of $ 3,800.
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