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Over the past few days, the price of Bitcoin (BTC) has risen within a hair of the $ 14,000 level and Ether (ETH) has followed an equally strong performance, but the altcoin has failed to hold above the physiological support of $ 400.
Although the price of Ether is below $ 400, the data shows that traders are not worried about the options expiration on Friday. Investor optimism has been kept intact despite the recent lackluster performance of decentralized finance (DeFi).
Ether options worth $ 80 million will expire this Friday, but there has never been a strong argument for October. For starters, this number pales in comparison to the December and March figures of $ 282 million.
Even with a more granular view, the October options are somewhat balanced between calls and puts. This data is a sign of an indecisive market, which is neither bullish nor bearish when viewed in isolation.
As the data above shows, there is roughly the same amount of call (buy) options betting on prices up to $ 410, as there are put (sell) options that are eager for lower prices. The scenario becomes even more balanced after including OKEx numbers, which favor 2.5K ETH put (sell) options.
The main reason for the October options interest is the imminent launch of Ethereum’s ETH 2.0 staking. For investors willing to open leveraged bets for this event, the odds favor an outcome from December to March 2021. This logic holds true for both bulls and bears, thereby significantly diminishing investors’ appetite for short options. term.
By analyzing December’s $ 200 million in open interest, you’ll get a better idea of how investors are positioning themselves for the next Ethereum network update. Bullish strategies use this “event” around 62% of these options.
Option prices signaled an uptrend
For those unfamiliar with the “delta” mentioned in those charts, this indicator comes from the Black & Scholes option pricing model. It represents the mathematical probability that Ether is above that price on the expiration date based on its volatility. For example, the current option price shows a 33% probability that the price will be above $ 460 on December 25th.
Investors then compare calls and put options with similar probabilities. In a balanced market, traders should claim roughly the same premium for both options, with a 25% delta (odds).
Whenever the market is unwilling to take the downside risk, the indicator shifts negatively. On the other hand, a positive delta skew of 10% indicates that traders are asking for a lower premium (risk) for upside protection.
The chart above shows relatively constant optimism as the 25% delta slope has hovered around -11% for the past two months. While not excessive, it certainly shows that sentiment hasn’t changed despite the recent failure to sustain a $ 400 support level.
The best traders are currently long net
To further confirm whether this optimism reflects investor positions, the data provided by the long-to-short exchange of the top Ether traders should be analyzed. By examining the main client positions on spot, perpetual and futures contracts, exchanges can get a clearer view of whether traders are biased to the upside or downside.
There are occasional discrepancies in the methodologies used by different exchanges, so viewers should monitor the changes instead of absolute figures.
As shown by the chart above, no major changes have been made to the major Ether trading positions of the exchange. The decrease observed in Huobi is more than offset by the increasing long exposure of OKEx. Binance data was not included as it barely jumped from 1.06 earlier this month to the current 1.01 level.
Ultimately, despite the 7% drop in the price of Ether since last week and a relatively clear lack of appetite for short-term options, there are no signs of a downside.
This is because the 25% slope options price indicator and long-to-short ratios of top cryptocurrency traders slightly favor the bulls.
However, investors are focusing their bets on December and March deadlines, which seems to make sense as the Ethereum network faces its most massive upgrade ever.
At least, for now, these traders are confident that $ 400 will act as a support level in the future. B Regardless of what happens during tomorrow’s expiry, you should closely monitor the 25% options delta indicator and the long-to-short ratio of top traders.
The views and opinions expressed herein are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your research when making a decision.
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