One analyst noted that there has been a significant surge in options open interest, with most of the increase skewed towards call options.
“Over the past week, Ethereum options open contracts have increased by more than 300,000,” Bitfinex head of derivatives Jag Kooner told The Block. This is consistent with The Block’s data dashboard, which shows that total Ether options OI on the cryptocurrency derivatives exchange has reached $9 billion, its highest in months.
Likewise, open interest in Ether options on Ether futures on the Chicago Mercantile Exchange (CME) has increased dramatically, recently hitting an all-time high. Open interest in February Ether options on CME has reached $543.25 million, with just two days remaining until the end-of-month expiration on Friday, February 23.
Open interest is biased towards the currency
Kooner added that most traders are taking direct bullish positions on the Ethereum price by purchasing individual call options rather than participating in other “call spread” option positions that are recently offsetting.
“The increase in open interest is mostly biased towards calls, meaning there is a lot of zero short selling suggesting traders are buying calls directly at a much faster rate rather than the call spreads seen earlier this month,” he said.
According to data from Deribit, the highest group of options by volume over the past 24 hours are $3,500 strike price calls with March quarterly and month-end expirations.
A call option grants the right to buy, and a put option grants the right to sell. Traders who buy call options are implicitly assumed to be bullish on the market, while put buyers are assumed to be bearish.
The highest volume by open interest in the last 24 hours was the $3,500 call expiring at the end of March. Image: Deribit.
Kooner added that the “maximum pain price” for options expiring after April has moved higher to around $2,400 due to significant call-side bias. “This suggests that traders are optimistic about Ethereum price growth in the medium to long term,” he added.
Spot Ether ETF Approval Likely
However, Kooner noted that it is too early to tie this change to expectations that the U.S. Securities and Exchange Commission may approve a spot ether ETF. Analysts suggested that the current put-call rate means derivatives traders are not considering the possibility that the SEC will reject ETF applications.
“The put-call ratio has decreased significantly to 0.55 and has remained low at 0.43 over the past 24 hours, which suggests that hedging against SEC rejections has not increased significantly over the past few days at least.” Kooner said.
A put-call ratio below 1 indicates bullish sentiment and indicates more interest in potential upside (calls). In contrast, a put-call ratio greater than 1 generally suggests bearish sentiment, indicating more interest in downside protection (puts).
Liquidations surge due to Ethereum volatility
According to The Block’s pricing page, over the past 24 hours, the price of Ether has risen more than 3%, trading at $2,991 at 1:50 PM ET.
As price volatility intensified over the past 24 hours, liquidation of Ether positions surged, reaching a total of $33 million, according to Coinglass data. Short positions suffered the greatest losses, with more than $20 million worth of short positions liquidated.
The GM 30 Index, which represents the top 30 cryptocurrencies, is currently at 113.44, up 2.29% in the last 24 hours.
In the last 24 hours, the price of Ether has risen by more than 3%. Image: Block.
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