Interest in Ether options surges to score as traders bet on ‘merging’

  • Open interest — the number of options contracts traded but not squared off with an arbitrage position — has hit a new lifetime peak of nearly 4 million, according to data from major exchanges, including Deribit, tracked by Swiss-based derivatives analyst Laevitas. The previous peak of about 3.5 million was recorded in the second quarter.

  • “The desk traded an incredible amount of ETH calls this week, over 250,000 ETH in theory,” Singapore-based options trading giant QCP Capital stated in a Telegram chat.

  • “A few hedge fund names have been big buyers of ETH calls, and the massive demand drove September volumes up 100%,” the trading firm said, adding, “We expect this demand to continue as we approach the September consolidation.”

  • “There are big players in September and December ending, betting higher in the ether,” said Martin Cheung, an options trader at Pulsar Trading Capital.

  • Recently, the spread between the prices paid for sales offers in relation to calls has sharply reduced, which indicates a renewed demand for calls.

  • A call option gives the buyer the right, but not the obligation, to buy the underlying asset at a predetermined price on or before a specified date. Buyer is implicitly optimistic in the market. A put option is a bearish bet.

  • Optimism has returned to the ethereum market since Ethereum developer Tim Beiko announced September 19 as an interim date to complete the merger.

  • As the name suggests, the upgrade will integrate the existing Ethereum Proof of Work blockchain with a Proof of Stake blockchain called Beacon Chain, which has been in operation since 2020. It is a bullish move for ether.
  • “We are a huge fan of Ethereum as an asset. Recently we are bullish on the idea that the merger will create a wave of price appreciation after creating strong deflationary pressure (in the form of structural demand),” Jack Newold, founder of the Crypto Pragmatist newsletter, wrote in the Wednesday issue.

  • “While inflation in global economies remains at high levels, ETH is likely to become the largest deflationary currency.” [after the merge]Lucas Outumuro, Head of Research at IntoTheBlock, said in a research report published July 23. “The amount of ether released will decrease by about 90% as there will be no need to stimulate miners.”

  • Ether is trading at $1,620 at press time, a gain of 50% for the month, according to CoinDesk data.
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