Professional Trader’s Suggests ETH will Break the $400 Mark as Per the Futures Market Data
In the last three months, open interest in ETH options has increased fivefold to reach $337 million. According to the latest data from analytic firms, ether options have grown to about the same size as the BTC options market.
The options are divided into calls that are mainly aimed at bullish strategies and puts that are primarily used for beer trades.
This is a simplistic view, but it provides a good indication that professional traders expect big businesses to weigh heavily on the index.
The put/call ratio has reached 0.37, suggesting that there are open put options and bearish ones, but that changed when the Ether price fell by more than 40% in March.
The options market added more bearish put options, and traders began to build protective positions at an impressive pace. The put/call ratio has reached 1.04, which indicates that put options have a higher open interest than call options. After Ethereum (ETH) failed to break the 250-dollar mark, the public interest rate fell slightly to 0.84 dollars.
This indicator can be analyzed as a put at low odds could be worth a cent and a call option at high odds could be worth two cents.
The open interest rate can be analyzed to reduce the impact of the $400 expiration concentration, thus excluding such levels. This widely used indicator is the number of options with an exercise price of at least $500 per ETH at the time of expiry. This shows that 65% of all prospects are above current market levels, regardless of call or put. There are currently 530K ETH options below the $370 expiry, versus 280K ETH with strikes above $400.
The Uncommon Strike
This indicator could prove that most traders expect a strong rally, even if it does not necessarily lead to returns. Given sufficiently long maturities, more trades should expire at over $400.
Options (Skew) measures how much more expensive a call option is compared to a similar risk put option. This measurement compares the underlying future reference price with the current price of the option at the time of trading and the risk of loss.
If a call option is more expensive, it suggests that market makers are charging more for upside protection. In a neutral market, the fair price of both brands should be very similar. Still, if the opposite is exact of a more expensive put option, then this is a bullish signal.
On August 8, the ETH market signaled a price increase for the underlying September futures and options for the first time in over a month.
This is undoubtedly a bullish indicator, but recent price changes are influenced by market makers who continuously reassess bids and offers in line with volatility and market conditions. The $10 call option is trading at $0.082 per ETH, while the put options are trading at $0.063, which is 15.5% cheaper.
Upcoming Future Contracts Favours Bull
The most important indicator for futures contracts is the base level, which is measured by comparing one- and three-month agreements with the current spot price.
If the base turns negative, this signals a situation known as backwardation, and it should be noted that the current 20% share is not necessarily dangerous. Still, it could indicate excessive leverage by buyers. The annualized ETH futures base is 10%, which is a very bullish tone from a futures trading perspective. A healthy market should have an annual premium of 5% or more when all future trading is completed. Bear markets will have a base level of 0.5% (annualized 5.0%) and a premium of over 15%.
As the most leveraged forward positions are created at current price levels, buyers may be willing to pay higher carry costs for the long-term upside potential of ETH futures.
Still, the Past Doesn’t Guarantee the Future Results
Although many technical analysis traders analyze daily and weekly charts to give an insight into an asset’s future potential. Still, they create an incomplete view of the asset’s situation. It seems to be a better way to gauge the mood of professional traders to monitor the trading behavior of ETH futures and other asset classes in the market.
It is highly likely that the resistance at $400 can be broken in the coming weeks. The amount holding the strike level appears to be contaminated by the volume that happened more than two weeks ago when ether traded above $300.
