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Ether’s Options Market Sees Highest Trading Volume Since May

Ether calls at $6,000 and $7,000 strikes were most popular on Wednesday

Sep 2, 2021 at 11:55 a.m. UTC
Updated Sep 2, 2021 at 2:19 p.m. UTC

Ether’s options market has come alive with the cryptocurrency resuming the uptrend from July lows.

Major exchanges traded 172,472 ether (ETH) options contracts on Wednesday, the highest single-day figure since May 20, according to data tracked by Glassnode. Deribit, the world’s largest crypto options exchange, alone accounted for 172,000 contracts, while OKEx contributed the rest.

Including over-the-counter trading, daily volume tallied more than $630 million in nominal terms, also the highest in over three months. Over-the-counter tech platform Paradigm accounted for 40% of the global volume, Paradigm’s co-founder, Anand Gomes, told CoinDesk. Trades facilitated by Paradigm are automatically executed, margined and cleared at Deribit.

“Our highest market share for ETH has been 45%, so yesterday was one of our highest days,” Gomes said in a Telegram chat. Deribit and Paradigm introduced an institution-focused block-trading service two years ago.

Ether’s rally to 3.5-month highs above $3,800 has boosted options market activity, most of which has been concentrated in the higher strike or out-of-the-money calls or bullish bets.

Deribit data tracked by Laevitas shows Sept. 24 expiry calls at $6,000 and $7,000 registered trading volumes of more than 13,000 contracts as sophisticated traders set up “call spread” strategies at these strikes via Paradigm.

Call spread strategies involve buying/selling calls at a particular strike ($6,000 in this case) and simultaneously taking an opposite position in the higher strike call ($7,000). Paradigm, however, doesn’t reveal the nature of the flows, and so it’s not clear whether traders initiated the limited risk, limited reward bull call spreads by purchasing $6,000 calls and selling an equal number of $7,000 calls or did the reverse to set up a bear call spread.

That said, the way the options are priced suggests bullishness in the market. Data provided by derivatives analytics firm Skew shows the one-, three- and six-month put-call skews, which measure the value of puts relative to calls, continue to trade negative, indicating greater demand for calls than puts or bearish bets.

Ether is currently trading near $3,750 on major exchanges.

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Omkar Godbole is the senior reporter on CoinDesk's Markets team.

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