Ethereum bulls retain control ahead of $ 730 million ETH options expiration on Friday

Ether (ETH) started a rally on April 25, which resulted in a 90% gain that pushed the price up to $ 4,200. Non-stop action was fueled by an incredible rise in decentralized finance (DeFi) applications where stranded net worth exceeded $ 74 billion, a 51% increase in eighteen days.

This positive momentum decimated neutral to bearish puts (puts), giving the bulls even more incentive to continue the rally. On May 14, a total of $ 730 million in Ether options will expire and the bulls will have full control, as the call options are in the majority.

Daily DEX volume on the Ethereum network, USD. Source: DeBank

A record volume of Decentralized Exchange (DEX) transactions also occurred on May 9, surpassing $ 5 billion. This is roughly the average daily volume of the Coinbase exchange and a 150% increase from the previous month.

At first glance, the data favors bears

Regardless of the reasons for the Ether rally, weekly options expiration became more relevant as open interest increased. This data means traders should not overlook the importance of the 176,000 Ether option contracts that will expire on May 14.

ETH May 14 open options interest per strike, number of contracts. Source: Bybt

76,700 call (call) option contracts remain open for Friday’s expiration, with a current value of $ 228 million. The buyer of a call option can acquire Ether for a fixed price on a specified future date. As a result, this instrument is more frequently used on neutral to bullish strategies.

On the other hand, put options allow the buyer to hedge against negative price fluctuations. Therefore, these are needed for neutral to bearish strategies and currently total 99,000 contracts for May 14, open interest of $ 371 million.

Digging a little deeper gives a different result

These numbers reflect a bearish scenario at first, as evidenced by the call-to-put ratio of 0.77. However, having the right to sell Ether at $ 3200 on Friday isn’t very helpful, causing these options to trade below $ 12.

The recent bull run caused 85% of the puts to underwater, as only 16,000 Ether contracts exist at $ 3,700 and above.

This open interest of $ 60 million does not seem relevant, given the 45,000 call options targeting $ 3,800 or less. These are currently worth $ 169 million, giving bulls a net advantage of $ 109 million.

Bears have little to gain from lowering prices

If the bears somehow manage to push the price below $ 3,500 on Friday at 8:00 UTC, that would reduce their disadvantage by $ 86 million. Thus, they are prompted to remove the price, at least for the Friday expiration.

As for a longer view, unless there is pressure from the regulatory front in the United States, the path for the $ 5,000 ether is still a clear target for the bulls.

Investors and market makers are currently watching SEC Chairman Gary Gensler closely, although no deadline has been set despite recent remarks in Congress.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You need to do your own research when making a decision.

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