Investment

The $ 161M Ether option expires toward bulls as ETH overturns to support $ 2K


Some investors fear that Ether (ETH) the price could face a correction. The draft EIP-1559 is to be linked to the forthcoming Upgrade in London, which will change the structure of gas charges, but until then, traders are left to deal with high fees.

The goal of designing a flexible block size is a more predictable pricing model, but this update is scheduled for July, which means that Ether may be subject to price pressure in the short term. In addition, miners are concerned that the new proposal aims to burn part of the fees in order to create a shortage and reduce their income by up to 50%.

In preparation for adverse events, professional traders usually buy protective put options without reducing their positions, especially those that operate and bet on high yields. Although these transactions are generally costly in the long run, on some exchanges trades are also offered once a week or twice a week.

The call-to-call ratio favors bears, but there is more

Unlike futures contracts, options are divided into two segments. Call (purchase) options allow the buyer to obtain ether at a fixed price on the expiration date. It is generally used either in neutral arbitrage trades or in bullish strategies.

Meanwhile, put options are commonly used as protection against negative price fluctuations.

To understand how these competitive forces are balanced, it is necessary to compare the calls and the size of the options at each expiration price (strike).

For those unfamiliar with strategy strategies, Cointelegraph recently explained how to do it minimize losses despite maintaining an upward position.

Aggregated ether expires open on April 9. Source: Bybt

The above data shows that the Ether expiration on April 9 contains 77,800 ether contracts worth $ 161 million at the current level of $ 2,070. The call-put ratio so far favors the bear put option by 11% and dominates strikes below $ 1,850. Meanwhile, the rising call capabilities have crowded the scene above $ 1,900.

Despite the imbalance, the net impact tilts upwards

Option markets are an all-or-nothing game, meaning that they are either worthwhile or become worthless if they are traded above the call strike price, or vice versa for a put option holder.

By eliminating neutral to bearish put options 25% below the current price of $ 2,070 and call options above $ 2,480, it is easier to estimate the potential impact of next Friday’s expiration. Incentives to draw or dumping prices by more than 25% become less likely because potential gains rarely outweigh the costs.

The selection attracts 33,000 call options from $ 1,200 to $ 2,480, currently worth $ 68 million. Meanwhile, bear options have reached $ 1,580, representing 18,100 ether contracts worth $ 37 million. Therefore, buyers have a slight advantage after April 9.

The balance between call and put options originally showed a call-to-put ratio, which favors bear put options. However, by excluding put options 25% below the current price, the net result clearly favors bulls. This reinforces the view that the validity of April 9 should not be considered bearish.

The views and opinions expressed herein are those of an opinion author and does not necessarily reflect the views of the Cointelegraph. Every investment and business move involves risk. You should do your own research when making your decision.



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