Ether (ETH) entered a slightly bullish channel earlier this month, and the price is currently moving towards the $ 3,800 level. Despite the recent turmoil, Ether bulls are poised to turn a $ 53 million profit on the expiration of weekly options this Friday.
Investors also appear to be uninterested in Ether’s recent underperformance against Bitcoin (BTC) and altcoin’s gains to date stand at 265%. If Ether manages to stay above $ 3,600 on Friday, 99% of the $ 180 million put options will lose their value.
Ethereum’s smart contract competitors continue to pressure the leading network and at the time of writing, Ethereum’s average gas rates remain above $ 20. Polkadot (DOT) is scheduled to begin its auctions of sidechain on November 11, and this will support the launch of new tokens, decentralized finance applications (DeFi), Internet of Things (IoT) solutions, all via trustless cross-network bridges.
This week, Binance Smart Chain revealed plans to launch a $ 1 billion fund to accelerate adoption across the crypto industry. Investors often interpret potential incubation events supported by blockchain projects as bullish for their native assets and the price of BNB has gained at least 30% since the announcement.
The bears were not expecting prices above $ 3,300
Based on the recent slightly negative news flow, it is possible to understand why the bears placed 88% of their bets at $ 3,300 or less. Had the bulls been a little less greedy, they could have mastered Friday’s $ 365 million expiration.
The expiration on October 15 is perfectly balanced between the call (buy) and put (sell) options according to the long to short relationship. Still, this bird’s-eye view needs more detail, depending on the expiration price.
At first glance, both parties have Ether options worth $ 180 million, as indicated by the call-put ratio of 1.03.
However, this metric is misleading because Ether’s recent rally will likely wipe out most of your bearish bets. For example, if the price of Ether sustains above $ 3,500 at 8:00 am UTC on Friday, only $ 6.6 million of put options will be available.
Bulls are comfortable at $ 3,600
Any expiration price above $ 3,500 is a bear trap, although a $ 32 million lead shouldn’t be enough to cause damage. To put things in perspective, the monthly expiration of Ether options has an open interest of more than $ 800 million.
The four most probable scenarios are shown below considering current price levels, since the imbalance favoring either party represents the potential theoretical benefit of expiration.
The data shows how many contracts will be available on October 15 for bullish (call) and bearish (put) instruments.
- Between $ 3,300 and $ 3,500: 7,450 calls versus 3,550 put options. The net result favors the bulls by $ 13 million;
- Between $ 3,500 and $ 3,600: 11,150 calls vs. 1,900 put options. The net result favors the bulls by $ 32 million;
- Between $ 3,600 and $ 3,800: 15,400 calls versus 600 put options. The Bulls’ earnings rise to $ 74 million.
- Above $ 3,800: 27,450 calls versus 0 put options. Bulls dominate with earnings of $ 104 million.
This gross estimate considers call options used in bullish strategies and put options exclusively in neutral to bearish operations. However, a trader could have sold a put option, effectively gaining positive exposure to Ether above a specific price. But, unfortunately, there is no easy way to estimate this effect.
Bears need less than $ 3,500 to balance the scales
Bulls’ profit rises to $ 104 million with Ethereum trading above $ 3,800, thus a $ 30 million increase from the current estimated profit of $ 74 million. On the other hand, there is a $ 61 million gain from the bear’s perspective on pushing the price below $ 3,500, as the estimate above shows.
With just over a day to go before the October 15 expiration, bears will have a hard time suppressing the current bull run. Regardless of the competition faced by the Ethereum network and high gas fees, investor demand for decentralized financing (DeFi) and NFT appears to be enough to keep Ether on an uptrend.
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