Main insights:
Bullish strategies lead the $5 billion Ether options expiry, giving traders leverage for a price increase.
Neutral-to-bearish strategies fell short below $4,600, leaving traders vulnerable during Ether’s August surge.
The $5 billion Ether (ETH) options expiry on Friday could signify a pivotal moment for the cryptocurrency, as bullish strategies gain strength following a 22% price increase over the past month. This event may provide the momentum required to elevate Ether above $5,000, although investors are keeping a close eye on Nvidia (NVDA) earnings scheduled for Wednesday.
With a current market capitalization of $557 billion, Ether ranks among the top 30 tradable assets, surpassing major companies like Mastercard (MA) and Exxon Mobil (XOM). While the comparability of Ether to stocks is debated, its historical correlation with the S&P 500 implies that traders may adopt similar risk assessments for both.
A correlation exceeding 80% indicates that Ether’s price movement has closely followed that of the S&P 500, though there was a brief inversion during a two-week period in late July. Therefore, Ether traders should monitor corporate earnings, especially in the AI sector, a significant factor influencing the stock market index.
Ether call (buy) options show $2.75 billion in open interest, 22% higher than the $2.25 billion in put (sell) contracts, but the outcome of the expiry hinges on ETH’s price at 8:00 am UTC on Friday. Deribit leads the ETH options market with a 65% share, followed by OKX at 13% and CME with 8%, making it crucial to analyze data from the primary exchange.
Unprepared bearish Ether strategies for $4,000 and above
Ether bears were surprised when ETH surged earlier in August, as most bearish bets were positioned at $4,000 or lower. Despite encountering resistance at $4,800, traders employing bullish strategies are well-prepared to benefit from the $5 billion monthly expiry.
Only 6% of ETH put options were set at $4,600 or above, rendering most neutral-to-bearish structures effectively worthless. In contrast, 71% of call options were established at $4,600 or lower, with significant clusters at $4,400 and $4,500. Consequently, bulls are anticipated to keep supporting Ether’s price leading up to the monthly expiry.
Related: Ethereum‘s best month ever positions $7K ETH price as attainable
Below are four likely scenarios at Deribit based on current pricing patterns. These outcomes project theoretical profits derived from open interest discrepancies while omitting complex strategies, such as selling call options for downside price exposure.
Between $4,050 and $4,350: $820 million in calls (buy) compared to $260 million in puts (sell). The net effect favors call instruments by $560 million.
Between $4,350 and $4,550: $1.05 billion calls against $140 million puts, favoring calls by $915 million.
Between $4,550 and $4,850: $1.4 billion calls versus $45 million puts, favoring calls by $1.35 billion.
Between $4,850 and $5,200: $1.82 billion calls compared to $2 million puts, favoring calls by $1.8 billion.
Ether bulls are likely to emerge content from the monthly options expiry, even if ETH retraces to $4,400. While the possibility of Ether surpassing $5,000 in the coming weeks remains plausible, this outcome will likely hinge on trader sentiment following Nvidia’s earnings and their overall evaluation of global economic growth risks.
This article is for informational purposes only and is not intended as legal or investment advice. The opinions expressed here are solely those of the author and do not necessarily represent the views of Cointelegraph.
