Main insights:
Bullish strategies lead the $5 billion Ether options expiry, giving traders an upper hand if prices increase.
Most neutral-to-bearish strategies fell short below $4,600, leaving traders vulnerable as Ether surged in August.
The $5 billion Ether (ETH) options expiry on Friday may signify a pivotal moment for the cryptocurrency, as bullish strategies are now optimally positioned following a 22% ETH price increase over the past month. This event could provide the necessary momentum to elevate Ether above $5,000, although investors are also anticipating Nvidia (NVDA) earnings due this Wednesday.
With a current market cap of $557 billion, Ether ranks among the 30 largest tradable assets, surpassing major players such as Mastercard (MA) and Exxon Mobil (XOM). The debate continues regarding Ether’s comparability to stocks, but its historical correlation with the S&P 500 suggests that traders often apply similar risk evaluations to both assets.
A correlation exceeding 80% indicates that Ether’s price movements have closely tracked the S&P 500, although this relationship temporarily inverted during a two-week period in late July. Therefore, Ether traders should closely monitor corporate earnings, particularly within the artificial intelligence sector, which has significantly influenced the stock market index.
Ether call (buy) options account for $2.75 billion in open interest, outpacing the $2.25 billion in put (sell) contracts by 22%. However, the expiry outcome hinges on ETH’s price at 8:00 am UTC on Friday. Deribit leads the ETH options market with a 65% share, trailed by OKX at 13% and CME with 8%, making insights from the primary exchange particularly beneficial.
Unprepared bearish Ether strategies for $4,000 and above
Ether bears were surprised by the earlier August rally of ETH, as most bearish positions were established at $4,000 or lower. Despite resistance at $4,800, traders implementing bullish approaches are favorably positioned to benefit from the $5 billion monthly expiry.
A mere 6% of ETH put options were written at $4,600 or above, rendering most neutral-to-bearish structures practically worthless. In comparison, 71% of call options were placed at $4,600 or lower, with significant clusters at $4,400 and $4,500. Consequently, bulls are anticipated to continue bolstering Ether’s price ahead of the monthly expiry.
Related: Ethereum‘s best month ever brings $7K ETH price into view
The following are four likely scenarios at Deribit based on existing price trends. These projections estimate potential profits grounded in open interest disparities but do not factor in complex strategies, such as selling call options for downside exposure.
Between $4,050 and $4,350: $820 million in calls (buy) vs. $260 million in puts (sell). The net effect favors call instruments by $560 million.
Between $4,350 and $4,550: $1.05 billion in calls vs. $140 million in puts, favoring calls by $915 million.
Between $4,550 and $4,850: $1.4 billion in calls vs. $45 million in puts, favoring calls by $1.35 billion.
Between $4,850 and $5,200: $1.82 billion in calls vs. $2 million in puts, favoring calls by $1.8 billion.
Ether bulls are likely to emerge pleased from the monthly options expiry, even if ETH retraces to $4,400. While it remains plausible for Ether to surpass $5,000 in the coming weeks, this outcome will likely hinge on trader sentiment post-Nvidia earnings and their overall evaluation of global economic growth risks.
This article is for informational purposes only and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
