Traders pile $6.4bn into Ether options as bulls dominate before expiry

Options traders are flocking to Ether ahead of April’s final expiries, after the second-biggest cryptocurrency climbed above $2,000.

Data from Coinglass shows the open interest – the dollar value of contracts that haven’t yet expired – on Ether options sits above $6.4 billion, with $1.6 billion concentrated around the April 28 expiry. Most of the open interest comes from Deribit, an options trading platform popular with smaller retail investors, rather than bigger institutional players.

Since reaching $2,145 on April 16, Ether has cooled off, briefly dropping below the $1,800 level earlier in the week. But bets from options traders indicate their expectation it makes another run higher.

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Ether open interest at $2,000 level

“There is an elevated probability that Ether rallies into the options expiry tomorrow as the largest open interest happens to be the $2,000 level,” Markus Thielen, head of research and strategy at Matrixport a digital assets services platform, told DL News.

There are $117 million worth of calls — or bullish bets — at the $2,000 strike compared to just $28.7 million of puts. Puts represent bearish bets, and offer returns when the asset falls below its strike price.

But according to Thielen, upside calls currently trade at a significant premium.

“Price sensitive traders would rather buy perp futures at current levels,” he said, referring to perpetual futures, which track the real-time price of the underlying asset and do not expire.

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April’s options expiry is also notable due to the increased trading volume.

According to Coinglass data compiled by The Block, Ether open interest on the Chicago Mercantile Exchange has hit new highs, with analysts attributing the increase to the blockchain’s successful Shapella upgrade which took place earlier in the month. The data shows CME Ether options volume has risen to $272 million so far this month, up from $94.7 million in March.

“The market has experienced a rapid increase in options trading volume,” Caesar, head of Web3 and partnerships at DeFi options protocol Premia, told DL News. “In the short term this is mostly bullish as traders were caught off guard and are scrambling to allocate appropriately.”

However, Caesar said, open interest for June 30 $2,200 contracts has also quietly increased in tandem with the April 28 $2,000 expiries.

“This is a larger indication that traders are not fully euphoric, and may not believe this positive price action has a lot left in the tank,” he said.