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Ether’s meteoric climb to $3,300 has made all bearish put options useless ahead of the $470 million expiry this Friday.
On May 7, a total of $470 million in Ether (ETH) options are due to expire, and the only term to explain what is going to happen to bearish ETH traders is “slaughter”
If Ether remains over $3,100 until Friday 8:00 a.m. UTC, almost all of the 75,909 put (sell) option contracts will become useless.
According to DeBank, Ether’s rise has been fuelled by the growth of decentralised finance (DeFi), which has just exceeded $60 billion in overall valuation locked. Yat Siu, chairman and co-founder of Animoca Brands, defined the scene perfectly:
“DeFi will shape finance in incredibly fundamental ways. Perhaps the biggest way (including in China) is in financial education.”
“Imagine a world where financial inclusion is not just about having a bank account, but about being able to easily and effectively participate in various capital opportunities.”
Although this may have seemed far-fetched a year ago, the Ethereum network has paved the way for these markets to emerge in a relatively short period of time.
Concerning the May 7 option expiry, the neutral-to-bearish puts still have a $250 million open interest but appear to lose value as the settlement date progresses.
Although the obvious put-to-call ratio supports the more bearish Ether put options by 13%, when the trigger price (strike) for those derivatives is examined, there is no action above $3,100. Bears were taken off guard by Ether’s 55 percent surge over the last 30 days, as defensive puts were mostly based on $2,800 and below.
Bulls, on the other hand, are usually upbeat. The available interest in the call option contracts is 66,350, which is equivalent to $220 million. At the moment, 13.5 percent of such neutral-to-bullish option contracts have strike prices of $3,200 or more.
However, since call options totally rule above $2,700, bulls have incentives to push the market higher as the May 7 deadline approaches. In contrast to futures markets, there are few advantages to rolling over contracts that are now almost useless.
As seen above, the $2,450 and lower-strike ETH put options are available for less than $10 each. Meanwhile, some of them have no bids at all; therefore, for Ether bears, it makes sense to call it quits for this week’s expiry rather than waste time trying to save the badly cast bets.
For those who are sceptical of Ether’s current price, recently shown how the blockchain could be less expensive than conventional dividend-paying stocks like Roche or Procter & Gamble.
Furthermore, the meteoric rise of decentralised apps, as well as regular Ethereum network transfers and purchases, should encourage Ether bulls to reach much higher for the end-of-month expiry.