More Than $350M In Ethereum Options Expired Last Week

The highly anticipated London hard fork has arrived, and most of the crypto community is happy with the update thus far. There has been a lot of talk regarding EIP-1559, and as of this time, over $1 million worth of ETH has been burned. Furthermore, ETH options worth $357 million will expire today, and so the control may have now gone from the bears to the bulls.

ETH’s price had managed to rally by 50% around the time the London update arrived, and this was due to numerous investors believing that the EIP-1559 upgrade shall be able to adequately fix the glaring issue of ridiculously high transaction fees. Moreover, the investors are hoping that Ethereum will finally become a deflationary asset thanks to the upgrade.

Bears were not expecting such a strong rally

Dan Morehead, the CEO of Pantera Capital, has made the bold prediction that Ethereum’s new upgrade will help the altcoin eventually ‘flip’ Bitcoin (BTC). He expects Ethereum to ultimately become the world’s leading cryptocurrency. However, time will tell whether this shall be the case or not.

Also, we had originally seen the situation to be more or less balanced due to the ratio (call-to-put) standing at 1.15. Although the benefits are not all that much, this nevertheless does slightly favor the call option (neutral to bearish) by 15%. In other words, the indicator is a reflection of the near 71,000 call options, which are nearly equal to a massive $191 million open interest, and stacked against the put options (61,632) that reflect the open interest amount, which totals $166 million.

As such, the chart would seem to indicate that the bears were indeed not anticipating a sharp rise for Ethereum in this relatively short period of time, but that is exactly what had happened when ETH had gone over $2,800. Should ETH manage to maintain this price by the end of today, then all of the 61,653 contracts could essentially be deemed worthless. Analysts have since said that this kind of behavior is highly unusual and is a reflection of how volatile and unpredictable the recent strong upwards movement for the price actually was.

What to expect

Although all protective put options shall be considered worthless over $2,700, a portion of the aforementioned call options (neutral to bearish) had been positioned at the marks of $2,800 as well as $3,000. In this way, even if ETH manages to sustain its price at $2,700, nearly 40% of the call options’ open interest (the abovementioned $191 million) will become worthless.

Lastly, at the $2,700 mark, the call options will hold an advantage of $116 million. But, should ETH trade beneath $2,600 at the end of today, then this amount shall dip to $75 million.

Leave a Reply

Your email address will not be published.