In recent days, Bitcoin (BTC) has dropped to $ 14,000, with Ether (ETH) following at similarly high rates, but the altcoin has failed to hold physiological support above $ 400.
Even though the Ether price is under $ 400, the data shows that traders are not concerned about the options expiring on Friday. Investor optimism continued despite the recent Decentralized Economy (DeFi) and the weak performance.
The $ 80 million Ether options expire on Friday, but there was no convincing case in October. First, that number pales in comparison to the December-March figures of $ 282 million.
Even on closer inspection, the options in October are somehow balanced between call and sell. This data is a sign of market uncertainty which is not bullish or bearish when viewed in isolation.
As you can see from the above data, there are roughly the same number of call (buy) options with prices up to 410 dollars as there are put (put) options that tend to lower prices. The scenario becomes more balanced after the inclusion of OKEx indicators, as preference is given to put (sell) options of 2,500 ETH.
The main reason for interest in the October options is the upcoming release of Ethereum ETH 2.0. For investors looking to open debt for the event, the chances of success are from December to March 2021. This rationale applies to both bulls and bears, and thus reduces investors ’desire to pursue short-term options.
An analysis of the open interest of $ 200 million in December will give you a better understanding of how investors are positioning themselves regarding the upcoming Ethereum network upgrade. Bullish strategies use this “event” in about 62% of these differences.
Option prices indicate growth
For those who are unfamiliar with the “delta” mentioned on these maps, this indicator is taken from variants of the Black & Scholes pricing model. It represents the mathematical probability that Ether’s price is higher than this price on the expiration date, depending on its volatility. For example, the current price of an option shows a 33% probability that the price will be above $ 460 on December 25th.
Then investors compare the buy and sell options with similar odds. In a balanced market, traders should demand roughly the same premium on both options with a 25% share (odds).
When the market does not want to follow a downtrend, the indicator turns negative. On the other hand, a positive partial deviation of 10% indicates that traders are calling for a lower (risk) premium for increased protection.
Delta options 3 months with a deviation of 25%. Source: Skew
The chart above shows relatively steady optimism as the delta change has hovered around 25% around -11% over the past two months. While this is not an exaggeration, it certainly shows that sentiment remains unchanged despite the recent lack of support for the $ 400 support level.
The top traders are currently net buying
To reassert whether this optimism reflects the position of the investor, one must analyze the data on long and short position exchanges by the leading Eders traders. By analyzing the best client positions in spot, permanent and futures contracts, stock exchanges can get a clearer picture of whether traders are leaning in an upward or downward direction.
From time to time, there are deviations in the methodologies used by the different exchanges, so viewers should track the changes and not the absolute numbers.
As shown in the chart above, there were no significant changes in the best Ether positions on the exchange. Huobi’s depreciation is offset by OKEx’s increased long-term risks. The Binance numbers were not included as they barely moved from 1.06 earlier this month to the 1.01 level today.
Finally, despite the 7% drop in the price of ether since last week and the relatively apparent lack of desire for short-term options, there are no bearish signals.
This is due to the fact that the price index of 25% of options is skewed and the proportion of long and short positions of the leading traders on the cryptocurrency exchange is slightly favored by bulls.
However, investors are focusing their bets on expiration dates in December and March, for each