On May 7, a total of $ 470 million in Ethereum options will expire, and Slaughter is really the only word describing what is about to happen to Ether’s bearish traders.
Currently, almost each and every one of the 75,909 put option contracts will cease to have value if Ether manages to stay above $ 3,100 until Friday at 8:00 am UTC.
Ether’s growth has been driven by the growth of decentralized finance (Challenge), which recently topped $ 60 billion in blocked net worth, according to Debank. Yat Siu, president and co-founder of Animoca Brands, perfectly described the scene when he said:
“Challenge will shape finance in incredibly fundamental ways. Perhaps the most important form (even in China) is financial education.
Yat Siu add:
“Imagine a world in which financial inclusion is not just about having a bank account, but about being able to participate easily and effectively in various capital opportunities.”
While this may have sounded futuristic a year ago, the Ethereum network opened its doors to these markets in no time.
As for Friday’s options maturity, neutral neutral sell options currently have an open interest of $ 250 million, but tend to lose value as liquidation day approaches.
Ether on May 7, aggregate options expire by strike. Source: Bybt
While the apparent put-to-call ratio favors the lower bearish Ether put options by 13%, when analyzing the target price (exercise) of these derivatives, activity above $ 3,100 is non-existent. Ether’s 55% rise in the last 30 days took bassists by surprise, as protection options focused primarily on $ 2,800 and less.
Bulls, on the other hand, tend to be very optimistic. Purchase option contracts have an open interest of $ 66,350, equivalent to $ 220 million. Currently, 13.5% of these bullish neutral option contracts have strikes of $ 3,200 or more.
However, considering that call options completely dominate above $ 2,700, bulls have incentives to positively push the price as Friday’s deadline approaches. Unlike futures markets, there are few benefits to renewing contracts that are now almost worthless.
Ether stock options for May 7th. Source: Deribit
As shown above, ETH’s $ 2,450 and bottom strike options are offered below $ 10 each. Meanwhile, some of them have no offer, and so for Ether Bears, it makes sense to throw in the towel for this week’s expiration instead of wasting resources to save the badly issued bets.
For those questioning Ether’s current valuation, Cointelegraph has recently shown how digital currency could be less risky than having traditional dividend-paying stocks like Roche or Procter & Gamble.
In addition, the spectacular growth of decentralized applications and the daily transfers and transactions of the Ethereum network should drive Ether bulls to aim even higher for the month-end expiration.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every movement of investment and trade involves a risk. You have to do your own research when making a decision.