The derivatives trading market of cryptocurrencies has been witnessing a great transformation with Ethereum options becoming the more sought-after asset. According to industry analyst Colin Wu, this is largely attributed to the upgrade of Shanghai's trading market. While 37,000 Bitcoin options contracts will expire this month with a notional value of around $1 billion, Ethereum options eclipses this with an astonishing expiry of 256,000 contracts whose notional value is estimated at around $4.8 billion.

Ethereum options are derivatives contracts that allow traders to speculate on the price of ETH. The contracts allow traders the freedom to buy or sell Ethereum at a specified price, the strike price, at a given expiry date without the hassle of fixed expiry dates faced in futures. Following the surge in Ethereum’s open interest (OI) with currently almost 2.6 million open contracts yet to be settled, the put/call ratio is at 1.09, implying a bearish sentiment as traders opt for short option contracts. On the other hand, Bitcoin’s put/call ratio stands at 0.51, demonstrating traders’ preference for long option contracts with a max pain price point at $28,000, relatively close to its current trading price.

However, the max pain point for Ethereum options is less favourable with the point set at $1,800 level. This may cause financial losses to a large group of option holders if Ethereum closes at $1,800 at the expiration of putting additional downward pressure on the prices. This is reflective of the cooling of Ethereum from its seven-month high of $1,920 to the current $1,870. Crypto markets on the whole remain rather stagnant around the $1.2 trillion capitalization.

To sum up, the expiry of huge Ethereum options this month may cause financial losses to some option holders and add downward pressure on the prices. Crypto markets still remain relatively inactive, despite the rise in Ethereum options speculation.



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