Key takeaways:
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Bullish strategies dominate the $5 billion Ether options expiry, giving traders an advantage if prices rise.
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Neutral-to-bearish strategies mostly failed below $4,600, leaving traders exposed as Ether rallied in August.
The $5 billion Ether (ETH) options expiry on Friday might mark a turning point for the cryptocurrency, as bullish strategies are now better positioned after a 22% ETH price gain over 30 days. The event could provide the momentum needed to push Ether above $5,000, though investor focus remains on Nvidia (NVDA) earnings expected this Wednesday.
Ether’s current $557 billion market capitalization places it among the 30 largest tradable assets, ahead of giants such as Mastercard (MA) and Exxon Mobil (XOM). While it is debated whether Ether should be compared to stocks, its historical correlation with the S&P 500 suggests that traders apply a similar risk assessment to both assets.
A correlation above 80% indicates Ether’s price has closely mirrored the S&P 500 movements, although the relationship briefly inverted during a two-week stretch in late July. As a result, Ether traders have reason to watch corporate earnings, particularly in the artificial intelligence sector, which has been a major driver for the stock market index.
Ether call (buy) options hold $2.75 billion in open interest, 22% more than the $2.25 billion in put (sell) contracts, but the expiry outcome depends on ETH’s price at 8:00 am UTC on Friday. Deribit dominates the ETH options market with a 65% share, followed by OKX at 13% and CME with 8%, making it valuable to analyze data from the leading exchange.
Bearish Ether strategies ill prepared for $4,000 and above
Ether bears were caught off guard when ETH rallied earlier in August, as most bearish bets had been placed at $4,000 or below. Despite rejection at $4,800, traders pursuing bullish strategies are well positioned to profit from the $5 billion monthly expiry.
Only 6% of ETH put options were placed at $4,600 or higher, leaving most neutral-to-bearish structures effectively worthless. In contrast, 71% of call options were positioned at $4,600 or lower, with notable clusters at $4,400 and $4,500. As a result, bulls are expected to continue supporting Ether’s price ahead of the monthly expiry.
Related: Ethereum‘s best month ever puts $7K ETH price within reach
Below are four probable scenarios at Deribit based on current price trends. These outcomes estimate theoretical profits based on open interest imbalances but exclude complex strategies, such as selling call options to obtain downside price exposure.
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Between $4,050 and $4,350: $820 million in calls (buy) vs. $260 million in puts (sell). The net result favors the call instruments by $560 million.
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Between $4,350 and $4,550: $1.05 billion calls vs. $140 million puts, favoring calls by $915 million.
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Between $4,550 and $4,850: $1.4 billion calls vs. $45 million puts, favoring calls by $1.35 billion.
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Between $4,850 and $5,200: $1.82 billion calls vs. $2 million puts, favoring calls by $1.8 billion.
Ether bulls are likely to emerge very satisfied from the monthly options expiry, even if ETH retraces to $4,400. While Ether breaking above $5,000 in the coming weeks remains feasible, this outcome will likely depend on traders’ sentiment following Nvidia earnings and their overall assessment of global economic growth risks.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.