Ether Options Open Interest Shows Concentration of Puts at $2,200 Strike Price
Ether options open interest ahead of Friday’s end-of-month expiry shows a concentration of puts at a strike price of $2,200. While this could indicate a bearish short-term outlook, it could also be a hedge of a bullish position.
Speculation on SEC Approval of Spot Ether ETF
Ether recently reached above $3,000 for the first time since April 2022 as speculators anticipate the approval of a spot ether ETF by the U.S. Securities and Exchange Commission (SEC).
Understanding Options and Their Implications
Options are derivative contracts that give traders the right to buy or sell an underlying asset at a predetermined price. Puts offer the right to sell, and calls offer the right to buy. Buying put options is often seen as bearish, while buying call options is bullish.
Investors Employing Hedging Strategy
The accumulation of puts at $2,200 could be part of a hedging strategy employed by investors. By buying out-of-the-money (OTM) calls at $3,000 and OTM puts at $2,200, investors can hedge against downside risks while going long on the underlying asset.
Institutional Traders Active in Options Market
Institutional investors are actively participating in the options market, particularly on the Chicago Mercantile Exchange (CME). There has been an increase in open interest for OTM puts at $2,200 for ether futures on CME.
Potential Conditions Not as Bearish as Puts Suggest
The presence of institutional traders employing hedging strategies suggests that market participants may not be as bearish as the buildup of puts would initially indicate.
Possible Bearish Outlook in the Short Term
While a hedging strategy is one possibility, the concentration of put positions at $2,200 could also indicate a bearish outlook in the short term, with traders preparing for potential price declines.
Ether Volatility Leads to Liquidations
In the past 24 hours, the price of ether experienced significant volatility, breaking through $3,000 before experiencing a sharp pullback. This volatility has caused over $47 million in liquidations of ether positions in perpetual futures markets.
Losses in Long and Short Positions
Both long and short positions in ether have experienced losses, with over $24 million in shorts being liquidated and over $22 million in longs being wiped out.
GM 30 Index Decreases by 1.80%
The GM 30 Index, which represents the top 30 cryptocurrencies, has decreased by 1.80% in the past 24 hours, reaching a value of 112.32.
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