Open positions for Ether (ETH) options increased 230% over the past three months to $ 393 million. While this is an impressive number, it doesn’t fully reflect how derivative instruments are used.
Open interest from ETH options. Source: Skew
Prices seem bullish
The first thing to consider are the most commonly used price levels (strikes). Again, this information does not give a clear picture of whether these options are primarily used for bullish or bearish strategies.
In general, a crowded chart with prices below current market levels indicates this Traders have been surprised by a recent rally or there are few investors currently feeling bullish.
Ether options by price level (thousands). Source: Skew
According to the above data There are currently 535,000 open interest Ether options priced at $ 380 or less. On the other hand, There are only 243,000 Ether options priced at $ 425 or more.
This could be explained in part by the 68% bull run to the $ 400 level in late July. However, this is not necessarily a positive indicator.
Unlike futures contracts, options are divided into two segments. Call options allow the buyer to buy Ether at a fixed price on the expiry date. On the other hand, the seller of the instrument is obliged to sell the ether.
By measuring whether more activity is being generated through call options or put options, it is possible to determine the general sentiment of the market.
Buy / Sell Relationship of Ether Options. Source: Skew
Put options are currently 21% less open than call instruments. This is the lowest level in 3 months and indicates general upward sentiment. of options traders.
While this is a good indicator, the buy / sell relationship reflects operations that could have happened more than a month ago. Therefore, to better assess the current market sentiment, you should focus on the 25% delta slope indicator.
The tilt indicator confirms the bullish sentiment
The delta slope of 25% compares equivalent call and put options side by side. When the protection for price increases through call options is more expensive, the tilt indicator moves into negative territory. The opposite is true when investors are bearish and put options are trading at a premium and the tilt indicators are changing positively.
25% Delta Slope of 3 Month Ether Options. Source: Skew
The graph above shows us the change to a bullish stance since the end of May, which reached an almost extreme optimism level of 20% at the end of July. Currently, the -12% slope is in the bullish territory, which confirms what the buy / sell ratio indicator is showing.
Usually, Ether options look bullish despite the price concentration below the $ 400 level.
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