The expiration of futures and options on May 28th could be a tipping point for Ether (ETH) as the cryptocurrency rose 60% from its low of $ 1,730 on May 23rd. Although the open positions are $ 6.2 billion, only 16% expire on Friday as most of the action takes place in June and there are open-ended contracts.
The expiry of the options must be taken into account as this can lead to an imbalance of forces. This characteristic does not apply to futures markets where longs (buyers) and shorts (sellers) are always the same.
The options are divided into two independent segments: Look up options most commonly used in neutral and bullish strategies, and place options on neutral to bearish strategies.
While long and short positions in ether futures remain the same at all times, the options markets provide a clear picture of which side is gaining the upper hand.
The open interest in Ether futures fell sharply after the market correction
The relentless decline, which began after the all-time high of $ 4,380 on May 12, lasted eleven days, and the price eventually bottomed at $ 1,730. The low prices didn’t last long, however, and Ether quickly regained support at $ 2,400. Open interest in futures declined 54% to $ 5.2 billion as leveraged buyers were liquidated and short sellers took profits.
In the $ 980 million ether futures maturing this Friday, the Huobi exchange leads the way with $ 300 million in open positions. CME follows closely, however, CME traders traditionally roll over most of the positions in the last few days of trading so this number could be greatly reduced as we near the deadline.
At first glance, the outlook favors call options ranging from neutral to bullish
Until the end of May 28th there is 189,000 ether call options stacked against 153,900 put options. This initial analysis gives neutral to bullish calls a 23% advantage. However, we must consider the right to buy Ether for $ 3,200 or more in less than 16 hours, which is not particularly cheap right now.
Same goes for the ultra-bearish put options of $ 2,300 and below. In order to properly analyze the potential pressure that Friday’s expiration will put, these prices need to be ruled out.
Note that $ 3,000 is a crucial level for the bulls as 30,700 call options are stacked versus 15,000 put options. That is, if the bears manage to keep the price of Ether below that price, the call options from neutral to bullish will be 54,500 ETH, which is $ 150 million.
In the meantime, the neutral to bearish put options of USD 3,000 and more amount to 52,700 ETH, which corresponds to an open interest of USD 145 million. This results in a balanced force after the option expires.
Bulls have little incentive to push the price above $ 3,000
If the bulls decide to show strength and push the price above $ 3,000, the difference will change to 45,700 ETH contracts worth $ 125 million. While significant, it is unlikely to be enough to drive the price higher.
Futures traders were less than optimistic after Cointelegraph’s recent strong sell-off on May 24th. In terms of options, call and put pressures appear balanced at current levels and shouldn’t cause any surprises on Friday.
Huobi, OKEx and Deribit will expire on May 28th at 8:00 a.m. UTC. CME futures and options expire a little later in the day at 3:00 p.m. UTC.
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