Ether (ETH) entered a slightly bullish channel earlier this month and the price is currently hovering towards the $ 3,800 mark. Despite the recent turmoil, the Ether bulls are set to make a profit of $ 53 million as the weekly options expire this Friday.
Investors also seem disinterested in that Recent underperformance of Ether vs Bitcoin (BTC) and to date, the altcoin has made a profit of 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 put pressure on the leading network, and as of this writing, Ethereum’s average gas prices remain above $ 20. Polkadot (DOT) is slated to begin its sidehain auctions on November 11th and this will support the rollout of new tokens, decentralized financial applications (DeFi) and Internet of Things (IoT) solutions, all over bridges of cross-networks without trust.
In this week, Binance Smart Chain announced plans to launch a $ 1 billion fund to accelerate adoption across the cryptocurrency industry. Investors often interpret potential blockchain project-backed incubation events as positive for their domestic wealth, and the price of BNB has risen by at least 30% since the announcement.
The bears weren’t 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 stakes at $ 3,300 or less. Had the cops been a little less greedy, they could have mastered the $ 365 million expiration date on Friday.
The process on October 15 is perfectly balanced between the call (buy) and put (sell) options according to the ratio of long and short positions. However, this bird’s eye view needs more details depending on the expiry price.
At a glance, both parties have $ 180 million worth of ether options, as indicated by the ratio of 1.03.
However, this metric is misleading as the recent rally in Ether is likely to ruin most of your bearish bets. For example, if the price of Ether is above $ 3,500 at 8:00 a.m. UTC on Friday, there are only $ 6.6 million in put options available.
Bulls comfortably at $ 3,600
Any expiry price above $ 3,500 is a bear trap, though a $ 32 million lead shouldn’t be enough to cause damage. To put things in perspective, the monthly expiry of ether options has an open interest of more than $ 800 million.
The following are the four most likely scenarios taking into account the current price level, as the imbalance favoring one of the parties represents the potential theoretical benefit of decay.
The data shows how many contracts will be active on October 15th for bullish (call) and bearish (put) instruments.
- Between $ 3300 and $ 3500: 7,450 call options vs. 3,550 put options. The net result favors the cops by $ 13 million;
- Between $ 3,500 and $ 3,600: 11,150 call options vs. 1,900 put options. The net result favors the cops by $ 32 million;
- Between $ 3,600 and $ 3,800: 15,400 call options vs. 600 put options. The cops’ profits rise to $ 74 million.
- Over $ 3,800: 27,450 call options versus 0 put options. The bulls dominate with a profit of $ 104 million.
This gross estimate takes into account call options used in bullish strategies and put options only in neutral to bearish operations. However, a trader could have sold a put option to effectively get positive exposure to ether above a certain price. But unfortunately there is no easy way to gauge this effect.
It takes bears less than $ 3,500 to balance the scales
The bullish profit rises to $ 104 million when Ethereum trades above $ 3,800, an increase of $ 30 million from the current estimated profit of $ 74 million. On the other hand, if the price is pushed below $ 3,500, as the above estimate shows, then from a bear’s point of view, the profit would be $ 61 million.
With just over a day until the October 15th expires, bears will have a hard time suppressing the current bull run. Despite the competition from the Ethereum network and high gas fees, demand from decentralized finance (DeFi) and NFT investors appears to be sufficient to keep Ether on an uptrend.
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