Ether (ETH) entered a slightly bullish channel earlier this month and it’s currently marching towards the $ 3,800 mark. Despite the recent turmoil, the Ether bulls are set to make a profit of $ 53 million on the weekly options expiration on October 15th.
Investors also seem disinterested in Ether’s recent underperformance versus Bitcoin (BTC), and to date the altcoin is still at 265%. If Ether manages to stay above $ 3,600 on Friday, 99% of the $ 180 million put (sell) options will be worthless.
Ethereum’s smart contract competitors continue to put pressure on the leading network, and at the time of writing, Ethereum’s average gas fees remain above $ 20. Polkadot (DOT) is expected to begin its sidechain auctions on November 11th, and this will support new token launches, decentralized financial (DeFi) and Internet of Things (IoT) solutions, all of which run over trusted cross-network bridges.
This week, Binance Smart Chain revealed plans to launch a $ 1 billion fund to accelerate adoption across the crypto industry. Investors typically interpret potential incubation events backed by blockchain projects as bullish on their domestic assets, and BNB price has risen by at least 30% since the announcement.
Bears weren’t expecting prices above $ 3,300
Based on recent slightly negative news, it is possible to understand why bears placed 88% of their bets at USD 3,300 or below. Had the cops been a little less greedy, they could have dominated the $ 365 million spout on October 8th.
The maturity date on October 15 is perfectly balanced between call (buy) and put (sell) options according to the long-short ratio. However, this bird’s eye view requires further details depending on the expiry price.
At first glance, both sides hold around $ 180 million worth of ether options, as evidenced by the call-to-put ratio of 1.03.
This metric is misleading, however, as the recent Ether rally is likely to ruin most of their bearish bets. For example, if the price of Ether stays above $ 3,500 at 8:00 a.m. UTC on Friday, only $ 6.6 million of put (put) options will be available.
Cops feel at $ 3,600. well
Any expiry price above $ 3,500 is a bear trap, although a $ 32 million benefit shouldn’t be enough to cause harm. To put things in perspective, Ether’s monthly option expiry holds over $ 800 million in open interest.
The following are the four most likely scenarios taking into account the current price level, as the imbalance that favors both sides represents the potential theoretical gain from decay.
The data shows how many contracts will be available on October 15th for both bull (call) and bear (put) instruments.
- Between $ 3,300 and $ 3,500: 7,450 calls vs. 3,550 puts. Net income favors bulls by $ 13 million;
- Between $ 3,500 and $ 3,600: 11,150 calls vs. 1,900 puts. Net income favors bulls by $ 32 million;
- Between $ 3,600 and $ 3,800: 15,400 calls vs. 600 puts. Bulls’ profit rises to $ 74 million.
- Over $ 3,800: 27,450 calls vs. 0 puts. Bulls dominate with a profit of $ 104 million.
This rough estimate takes into account call (buy) options used in bullish strategies and put (sell) options only in neutral to bearish trades. However, a trader could have sold a put option to effectively get positive exposure to ether above a certain price. Unfortunately, there is no easy way to gauge this effect.
It takes bears less than $ 3,500 to balance the scales
Bulls’ profit climbs to $ 104 million when Ethereum trades above $ 3,800, an increase of $ 30 million from its current estimated profit of $ 74 million. On the other hand, there is a profit of $ 61 million from a bear perspective if the price is pushed below $ 3,500, as the above estimate shows.
With just over a day before October 15th is due, the bears will have a hard time suppressing the current bull run. Regardless of the competition the Ethereum network faces and the high gas fees, investor demand for decentralized funding (DeFi) and non-fungible tokens (NFTs) appears to be enough to keep Ether on an uptrend.
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