Ethereum Options Observe Extraordinary Data: What Does It Mean?

According to analysts, the options market has trended upward in the largest tranche of Ethereum options open interest by expiration date, with contracts expiring at the end of April. According to data from Deribit, approximately $3.3 billion in nominal ETH options will expire, with roughly two-thirds of that amount put into calls, indicating a bullish bias for the price.

Jake Ostrovskis, a trader at Wintermute OTC, noted that call options are clustered between $3,700 and $4,000, indicating an uptrend in the market and underlying bullish sentiment. He added that current open interest skewness meant calls were trading at a premium to puts and implied volatility increased over the weekend.

“Taken together, this suggests greater directional bias and less reliance on option transactions to fund premiums,” Ostrovskis said.

Deribit data reveals that the ETH put-call ratio for the end-April expiration date is currently 0.45, making it slightly more bullish compared to Bitcoin options, which have a put-call ratio of 0.48. Ostrovskis believes this is because investors see relative high valuations of ETH, which has underperformed BTC so far in 2024.

A put-call option ratio below one indicates that call volume exceeds put volume and bullish sentiment in the market. It is generally assumed that an investor who purchases a call option is indirectly bullish on the market, while a put option buyer is bearish.

However, Ostrovskis warned that the perceived negative effects of regulatory changes on the ETH coin are still a concern. “Aside from the market’s view that there is only a 17% chance of an ETF being approved by June 30, 2024, the SEC is still waging a campaign to categorize ETH as a security. Last week, the SEC issued a statement regarding spot ETH ETFs. “Even the report that it requested comment, a trigger that should have been well received by the market, appears to have been ignored,” he said.

*This is not investment advice.

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