The open interest in Ether’s options in the leading Derebit market has continued to rise to unprecedented levels. The number of active Ethereum contracts increased by 315% to $158 million. But what does this mean for the second kryptonie?
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Open Interest on Ethereum Options
The participants in the options market are some of the most knowledgeable and experienced players in the market.
The relevance of this is that the remarkable increase in the trading volume of Ethereum options could reveal much about Bitcoin Loophole price movements.
The intensification of options trading activity could generate volatility in the ETH market in the short term.
Deribit, the derivatives exchange, launched Ether options more than a year ago, however they have been widely accepted and have recently gained strength.
The open interest indicates the total number of contracts that currently exist for Ethereum options.
And according to Skew’s data, in the last 2 months it has shot up 315% to $158 million.
These are contracts that have been negotiated but have not yet been settled by an offsetting transaction or an exercise or assignment.
The impressive increase in this short period has also led to increased investor optimism in making upward forecasts for Ether.
However, it is important for participants to take a closer look at the numbers and understand that it does not necessarily mean a bullish interest.
This is because Ethereum’s open interest contracts, like any other asset, can be bullish or bearish.
Call options offer investors the opportunity to leverage without the risk of liquidation. Meanwhile, put options are a good way to protect against a possible future sale.
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The notable increase in the amount of open interest in Ethereum options may be linked to the positive expectation towards the expected launch of ETH 2.0.
A bullish sentiment in the options market could mean that traders anticipate that the cryptomoney will jump to another recovery.
Another factor that validated the growing optimism in the market was the influx of institutional support in the asset manager, Grayscale.
That manager has also accumulated over $110 million in Ether over the course of 2020.
Likewise, the increases in recent months could indicate that investors are looking for alternatives in the face of a global economic environment caused by the Coronavirus pandemic.
Although before the recent escalation, Ethereum’s options saw peaks of activity in September 2019 when ETH increased by nearly 20%.
This went from less than $170 to more than $200, over the course of three weeks and again in February 2020, after ETH prices rose nearly 125% in six weeks.
Option traders are interested in taking advantage of these price changes because option contract prices are derived from the market price at the time the contracts are issued.