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.
“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.”