Ethereum options expire this month, suggesting that ETH’s upside is minimal

Ethereum options expire this month, suggesting that ETH’s upside is minimal

Ethereum price has been in the uptrend since the beginning of the year, but main options indicators indicate that overcoming the $2,000 mark would be a challenge.

To date, the price of Ether (ETH) has increased by 85 percent in 2021, and options traders are still highly positive about altcoin’s short-term results.

Over 96,000 ($172 million) call option contracts open interest between $2,240 and $3,520 are expected to expire on March 26. Does the 25 percent or higher gain accurately represent current market sentiment, or are these traders merely over-optimistic about Ether’s odds?

Ether price in USD. Source: TradingView

While the effective price of the right to purchase Ether at a fixed price on March 26 is much lower, these options cost investors at least $2 million. If Ether fails to rise by 25 percent from the current $1,808 price in two weeks, these $2,240 call options will be totally worthless.

Ether options aggregate open interest, March 26. Source: Bybt

As seen above, the call-put ratio is reasonably balanced at 1.07, and the more bearish the options provided above the $1,800 strike are non-existent. Meanwhile, bullish traders crowded the scene above $2,240, partly because of their low price. The cost per option contract over the past few weeks ranged from $6 to $40.

Even if those call option investors had previously purchased when Ether was trading below $1,400, it would make sense to close the position and lock in gains. These options will lose value over time as the deadline of 26 March comes unless the price increases above their respective strike price.

Thus, either these traders basically expect Ether to break $2,240 in two weeks, or options are being used in more nuanced strategies. Cointelegraph has clarified how $10,000 Ether call options are frequently used on calendar spreads.

The key risk predictor for options is neutral;

To determine the level of optimism of traders after Ether scored a local $1,880 top on March 9, one should look at the 25% delta skew.

Whenever the options market is unable to take downside risks, the indicator moves negatively. On the other hand, a positive 25% delta skew suggests that traders are seeking less premium (risk) for upside security.

3-day Ether options 25% delta skew. Source: laevitas.ch

The graph above indicates an indicator ranging from 5 to negative 10, which is known to be a neutral region.

If option traders were effectively bullish, upside-protection call options would have been trading at a premium.

There is a chance, as previously mentioned, that investors would use a more complicated strategy that includes multiple expiry dates or attacks. Even, if these options were purchased solely for upside leverage, it definitely does not reflect the overall feeling as calculated by the skew indicator.

The viewpoints and opinions expressed here are solely those of the author and do not necessarily represent the views of Cointelegraph. Any investment and trade step involves risk. When you make a decision, you can do your own analysis.

bitcoin
Bitcoin (BTC) $ 57,297.00 5.94%
ethereum
Ethereum (ETH) $ 4,367.89 7.51%
binance-coin
Binance Coin (BNB) $ 620.55 5.70%
tether
Tether (USDT) $ 1.00 0.12%
cardano
Cardano (ADA) $ 1.58 6.54%
solana
Solana (SOL) $ 208.69 11.96%
xrp
XRP (XRP) $ 0.978389 6.82%
polkadot
Polkadot (DOT) $ 36.03 7.88%
dogecoin
Dogecoin (DOGE) $ 0.213956 7.91%
usd-coin
USD Coin (USDC) $ 1.00 0.15%
shiba-inu
Shiba Inu (SHIB) $ 0.000040 4.78%
terra-luna
Terra (LUNA) $ 50.79 9.89%
avalanche-2
Avalanche (AVAX) $ 111.46 6.62%
chainlink
Chainlink (LINK) $ 24.90 6.51%
uniswap
Uniswap (UNI) $ 19.99 5.97%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 57,218.00 5.85%
litecoin
Litecoin (LTC) $ 200.15 6.19%
binance-usd
Binance USD (BUSD) $ 1.00 0.22%
algorand
Algorand (ALGO) $ 1.79 10.59%
matic-network
Polygon (MATIC) $ 1.70 9.75%
bitcoin-cash
Bitcoin Cash (BCH) $ 571.31 4.14%
cosmos
Cosmos (ATOM) $ 26.92 4.22%
vechain
VeChain (VET) $ 0.118035 8.53%
stellar
Stellar (XLM) $ 0.330428 6.47%
internet-computer
Internet Computer (ICP) $ 41.44 2.61%
fantom
Fantom (FTM) $ 2.11 6.13%
axie-infinity
Axie Infinity (AXS) $ 134.22 5.74%
ftx-token
FTX Token (FTT) $ 50.87 8.14%
filecoin
Filecoin (FIL) $ 54.83 0.56%
tron
TRON (TRX) $ 0.095963 4.94%
dai
Dai (DAI) $ 1.00 0.42%
ethereum-classic
Ethereum Classic (ETC) $ 47.68 5.02%
theta-token
Theta Network (THETA) $ 6.48 3.44%
near
Near (NEAR) $ 8.28 4.20%
compound-ether
cETH (CETH) $ 87.46 7.54%
okb
OKB (OKB) $ 24.28 8.93%
hedera-hashgraph
Hedera (HBAR) $ 0.332123 6.22%
tezos
Tezos (XTZ) $ 5.08 15.16%
staked-ether
Lido Staked Ether (STETH) $ 4,307.19 7.45%
elrond-erd-2
Elrond (EGLD) $ 403.69 0.72%
monero
Monero (XMR) $ 235.39 2.03%
crypto-com-chain
Crypto.com Coin (CRO) $ 0.739849 3.70%
eos
EOS (EOS) $ 3.95 4.30%
pancakeswap-token
PancakeSwap (CAKE) $ 14.53 12.86%