Overly-confident Ethereum options traders are nervously watching the $3,200 level ahead of this week’s $800 million ETH options expiry.
Etere (ETH) will face a critical $820 million monthly options expiry on Friday, agosto. 27. That will be the first time that $3,000 and higher options will have a real fighting chance, even though bulls seem to have missed a good opportunity to dominate the expiry because they were too optimistic about Ether’s price potential.
It is unclear why $140 million of the neutral-to-bullish call options were placed between $3,800 e $8,000, but these instruments will likely become worthless as the monthly expiry approaches.
Competition and the success of interoperability-focused protocols impact Ether price
The Ethereum network has struggled due to its own success, which consistently leads to network congestion and transaction fees of up to $20 e più in alto. inoltre, the rise of nonfungible tokens and decentralized finance imposed further stress on the network.
Maybe some of the inflow that was supposed to move Ether price up went to its competitors, which presented stellar performances recently. Per esempio, Cardano (C'È) surged over 100% quarter-to-date as investors expect its long-awaited smart contracts to launch on Sept. 12.
Solana (SOL), another smart contract contender, captured one-third of the inflows to crypto investment products over the last week, according to CoinShares “Digital Asset Fund Flows Weekly.”
da ultimo, layer-two scaling solutions like Polygon (MATIC) have also seen 150% gains after successfully bringing DeFi projects into its interoperability pool and launching a decentralized autonomous organization (DAO) to scale projects on the software development kits.
Notice how the $3,000 level vastly dominates Friday’s expiry with 30,900 ETH option contracts, che rappresenta a $100 million open interest.
The initial call-to-put analysis shows a slight prevalence of the neutral-to-bullish call instruments, con 13% larger open interest. però, bears seem to have been taken by surprise because 83% of their bets have been placed at $2,900 o inferiore.
To succeed, bears need to push and hold Ether price below $2,900
Nearly half of the neutral-to-bullish call options have expiry prices set at $3,500 o più alto. These instruments will become worthless if Ether trades below that price on Friday. The options expiry happens at 8:00 sono UTC, so traders might expect some price volatility nearing the event.
Below are the three most likely scenarios that will likely happen and their estimated gross result. Keep in mind that some investors could be trading more complex strategies, including market-neutral ones that use calls and protective puts. Di conseguenza, this estimation is somewhat rudimentary.
The simplistic analysis weighs the call (acquistare) options against the put (vendere) options available at each strike level. Così, per esempio, if Ether’s expiry happens at $3,050, every neutral-to-bullish call option above $3,000 becomes worthless.
- Sotto $2,900: 36,360 chiamate vs. 32,700 mette. The net result is virtually balanced.
- Fra $2,900 e $3,000: 36,770 chiamate vs. 20,320 mette. The net result favors the neutral-to-bullish instruments by $48 milioni.
- Fra $3,000 e $3,200: 55,660 chiamate vs. 8,320 mette. The net result favors the neutral-to-bullish instruments by $147 milioni.
- Sopra $3,200: 62,260 chiamate vs. 1,490 mette. The net result favors the neutral-to-bullish instruments by $197 milioni.
Bears will try to minimize the damage, and luckily for them, the honeypot for a favorable price move doesn’t look worthwhile of a significant effort from bulls.
As for the excessively optimistic options traders, they should better rethink their strategy for the September expiry. The Ethereum network seems to be its own biggest enemy because the increasing adoption has fueled the rise in competitors’ decentralized finance applications.
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