An Increase in Ether Options Open Interest Signals Bullish Sentiment
An analyst has observed a significant surge in options open interest, with a majority of the increase leaning towards calls. According to Bitfinex Head of Derivatives Jag Kooner, the open interest for ether options has grown by more than 300,000 contracts in the past week. This aligns with data from The Block’s Data Dashboard, which indicates that the total ether options open interest across crypto derivatives exchanges has reached a multi-month high of $9 billion.
Additionally, CME ether options open interest has also experienced a sharp rise and recently hit an all-time high. As of now, CME ether options open interest for February stands at $543.25 million.
Open Interest Skewed Towards Calls
Most traders have been taking a straightforward bullish position on ether’s price by purchasing individual call options without engaging in other offsetting “call spread” options positions. The increase in open interest is primarily skewed towards calls, suggesting that traders are buying calls directly at a faster pace instead of call spreads.
Data from Deribit reveals that the top cohort of options by trading volume in the past 24 hours is for calls at a strike price of $3,500, set to expire in March.
Possible Approval of a Spot Ether ETF
It is too early to connect this shift in open interest to anticipation of the U.S. Securities and Exchange Commission (SEC) approving a spot ether exchange-traded fund (ETF). However, the put-call ratio suggests that derivatives traders are not factoring in the possibility of ETF rejections by the SEC.
The put-call ratio has significantly declined to 0.55, indicating bullish sentiment and lack of hedging for an SEC rejection.
Ether Volatility Leads to Liquidations
In the past 24 hours, the price of ether has risen by over 3%, causing a spike in liquidations of ether positions. Coinglass data shows that over $33 million worth of positions were liquidated, with short positions experiencing the greatest losses.
The GM 30 Index, which represents the top 30 cryptocurrencies, has increased by 2.29% in the past 24 hours.
An analyst has noted a significant surge in options open interest, with the majority of the increase being skewed towards calls.
“Ether options open interest has increased by more than 300,000 contracts in the past week,” Bitfinex Head of Derivatives Jag Kooner told The Block. This concurs with The Block’s Data Dashboard, which shows the total ether options OI across crypto derivatives exchanges has reached a multi-month high of $9 billion.
Similarly, ether options open interest on ether futures on the Chicago Mercantile Exchange (CME) has also risen sharply, recently hitting a fresh all-time high. CME ether options open interest for February has reached $543.25 million, with still almost two days to go before the end-of-month expiry on Friday, Feb. 23.
Open interest skewed towards calls
Kooner added that most traders have recently been taking a straightforward bullish position on ether’s price by buying individual call options without simultaneously engaging in other offsetting “call spread” options positions.
“The increase in open interest is mostly skewed towards calls indicating that we have a lot of naked longs implying traders are buying calls directly at a much faster pace instead of call spreads which was seen earlier in the month,” he said.
According to data from Deribit, the top cohort of options by trading volume in the past 24 hours is for calls at a strike price of $3,500, for the March quarterly and end-of-month expiry.
A call option gives the right to buy, and a put offers the right to sell. It is assumed that a trader who buys call options is implicitly bullish on the market, while a put buyer is bearish.
Top volume by open interest in the past 24 hours has been calls at $3,500 for the end of March expiry. Image: Deribit.
Possible approval of a spot ether ETF
Kooner mentioned that it was too early to connect this shift to anticipation of the U.S. Securities and Exchange Commission possibly approving a spot ether ETF. The analyst suggested that the current put-call ratio indicates derivatives traders are also not factoring in the possibility that the SEC could reject ETF applications.
“The put-call ratio has declined significantly to 0.55, and remains low in terms of the past 24 hours at 0.43 which suggests that at least in the past couple of days there has not been any significant increase in hedging for an SEC rejection,” Kooner said.
A put-call ratio of less than 1 implies bullish sentiment, indicating more interest in potential upside (calls). In contrast to this, a put-call ratio greater than 1 typically suggests bearish sentiment, indicating more interest in downside protection (puts).
Ether volatility causes spike in liquidations
In the past 24 hours the price of ether has risen by over 3% to trade at $2,991 at 1:50 p.m. ET, according to The Block’s Price Page.
Fluctuating price action in the past 24 hours has caused a spike in liquidations of ether positions, totaling over $33 million, according to Coinglass data. Short positions experienced the greatest losses, with more than $20 million in shorts liquidated.
The GM 30 Index, representing a selection of the top 30 cryptocurrencies, has increased by 2.29% in the past 24 hours, now at 113.44.
The price of ether has risen by over 3% in the past 24 hours. Image: The Block.
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