The price of Ethereum (ETH) has fluctuated a lot lately, and to the surprise of many traders, the level of $ 4000 is still significant resistance. The price currently follows the upward channel that started in August. But every time support is tested, the risk of a strong correction increases. With that in mind, the $ 340 million options expire in October.
Ethereum price on Bitstamp in USD. Source: TradingView
The bulls made major expiration efforts, but they seemed very optimistic on October 1, so 215 million dollars (calls) will be closer as the expiration awaits on the horizon.
Ether is likely to become a prey for its own success as the demand for decentralized economy (DeFi) apps and non-perishable tokens (NFT) continues to plummet. As a result, the average gas price over the last 10 days has exceeded $ 20.
Highest fuel costs in the last 24 hours. Source: etherscan.io
Please note that OpenSea, the largest NFT marketplace, has accounted for over 20% of the gas consumption of the entire Ethereum network in the last 24 hours.
Analyzing the huge demand for blockchain transactions, Polygon founder Sandeep Nailwal says it’s only a matter of time before Ethereum surpasses Bitcoin as the dominant Layer 1 protocol.
However, negative news continues to emerge as the fourth largest mining pool in Ethereum will close its operations in China, citing “regulatory policy”. In addition, SparkPool, the second largest mining pool for Ethereum, will close this month.
For the $ 340 million option, which expires on October 1, the bulls must push the price above $ 3,000 to avoid significant downward pressure.
On October 1, Ethereum Options picks up open interest rates. Source: Bybt.com
As mentioned above, the bulls were overwhelmed by the fact that the call instruments (lengths) were at or above $ 2900. So if the ether price stays below this price on September 17, only neutral or bullish alternatives worth $ 1.4 million will be activated by expiration.
This means that a $ 3000 put option will be worthless if Ether stays below that price at 08.00 UTC on 1 October.
The Bulls are betting more, but it’s a catch
The buy-to-call ratio of 1.74 is the small difference between a put (call) of $ 215 million and a put (call) of $ 125 million. Although bulls favor it, this wider view warrants a more detailed analysis, as some of these prices are unreasonable given the current price of $ 2,800.
Here are the four most likely scenarios for the price of ether. An imbalance in favor of both sides represents a theoretical advantage of the outlet.
Depending on the expiry price, the number of call (purchase) and sales (sales) contracts that become active varies:
Between $ 2400 and $ 2500: 0 requires $ 38,050. Safeguard Tools has a net worth of $ 95 million.
Between $ 2,500 and $ 2,800: 100 requires 22,300 putts. The net result is $ 60 million in guarantees.
$ 2,800 to $ 3,000: 2,300 calls against 13,800 put. Safeguard Tools has a net worth of $ 33 million.
$ 3000 to $ 3200: 9600 calls with 6700 pips. The result is a balance between bears and bulls.
This rough estimate takes into account call options that are used exclusively in bullish strategies and put options for neutral or bearish trades. However, investors can use more sophisticated strategies, which usually include different expiration dates.
The bulls were somehow crushed
The bears have full control over the expiration on October 1 and have enough incentive to push the price to below 2800 dollars. However, it must be taken into account that during negative price developments, as now for Ether, a seller can cause a negative pull of 2% by placing large bets and making strong sales.
On the other hand, bulls need a 7% positive price swing when Ether rises above $ 3,000 to offset the option’s expiration on October 1st. It is impossible to calculate how much a trader needs to spend to drive the market in this way, even if it seems like a big task.
If there are no surprises before October 1, the ethereal price will continue to trade below $ 2800.