Ethereum price hits $ 3,800, strengthening control of bulls on ETH options expiration on Friday

Ether (ETH) entered a slightly bullish channel earlier this month and the price is currently heading towards the $ 3,800 level. Despite the recent turmoil, the Ether bulls are expected to make a profit of $ 53 million at the weekly options expiration on Friday.

Investors also seem disinterested Ether’s recent underperformance against Bitcoin (BTC), and to date altcoin earnings stand at 265%. If Ether manages to stay above $ 3,600 on Friday, 99% of the $ 180 million put (put) options will become worthless.

Ether price at Bitstamp in USD. Source: TradingView

Competitors in Ethereum’s smart contracts continue to put pressure on the leading network and at the time of writing, Ethereum’s average gas charges remain above $ 20. Polkadot (DOT) should start his Sidechain auction on November 11, and that will support new token launches, Decentralized Finance (DeFi) applications, Internet of Things (IoT) solutions, all going over trustless inter-network bridges.

This week, Binance smart chain has revealed plans to launch a billion dollar fund to accelerate adoption across the crypto industry. Investors typically interpret potential incubation events supported by blockchain projects as bullish for their native assets, and the price of BNB has gained at least 30% since the announcement.

Bears Didn’t Expect Prices Over $ 3,300

Based on a recent slightly negative news feed, it is possible to see why the bears placed 88% of their bets at $ 3,300 or less. If the bulls had been a little less greedy, they might have dominated Friday’s $ 365 million expiration.

The October 15 expiration is perfectly balanced between call (buy) and put (sell) options based on the long / short ratio. Still, this bird’s eye view needs more detail, depending on the expiration price.

Ether October 15 open interest aggregate term. Source: Bybt

At first glance, both parties hold $ 180 million in Ether options, as indicated by the call-to-put ratio of 1.03.

However, this measure is misleading as the recent Ether rally will likely erase most of their bearish bets. For example, if the price of Ether remains above $ 3,500 at 8 a.m. UTC on Friday, only $ 6.6 million of put (put) options will be available.

Bulls are comfortable at $ 3,600

Any expiration price over $ 3,500 is a bear trap, although a benefit of $ 32 million shouldn’t be enough to cause any damage. To put it in perspective, the monthly expiration of Ether options holds over $ 800 million in open interest.

Below are the four most likely scenarios given current price levels, as the imbalance in favor of either side represents the potential theoretical profit from the expiration.

The data shows how many contracts will be available on October 15th for both bullish (call) and bearish (put) instruments.

  • Between $ 3,300 and $ 3,500: 7,450 calls against 3,550 put options. The net result favors the bulls by $ 13 million;
  • Between $ 3,500 and $ 3,600: 11,150 calls against 1,900 put options. The net result favors the bulls by $ 32 million;
  • Between $ 3,600 and $ 3,800: 15,400 calls against 600 put options. Bulls’ profit increases to $ 74 million.
  • Above $ 3,800: 27,450 calls against 0 put options. The Bulls Dominate Profiting $ 104 Million.

This raw estimate considers call (call) options used in bullish strategies and put (put) options exclusively in neutral to bearish trades. However, a trader could have sold a put option, thereby gaining positive ether exposure above a specific price. But, unfortunately, there is no easy way to estimate this effect.

Bears need less than $ 3,500 to balance the scales

Bulls profit increases to $ 104 million with Ethereum trading above $ 3,800, an increase of $ 30 million from the current estimated gain of $ 74 million. On the other hand, there is a gain of $ 61 million from the bear’s point of view putting pressure on the price below $ 3,500, as shown in the estimate above.

With just over a day to go until the October 15 expiration, the bears will be struggling to suppress the current bull run. Regardless of the competition the Ethereum network faces and high gas costs, investor demand for Decentralized Finance (DeFi) and NFTs appears to be sufficient to keep Ether in an uptrend.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trade move involves risk. You should do your own research before making a decision.

About Darnell Yu

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