Open Positions in Ether ‘Calls’ Hits 1 Million Mark as Traders Pile Onto Higher Strike Options

Open interest in ETH call options, or bullish bets, is twice more than that in puts.

AccessTimeIconNov 9, 2021 at 7:56 a.m. UTC
Updated May 11, 2023 at 6:42 p.m. UTC
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Ether’s options market flows appear more bullish than ever, with the cryptocurrency eyeing the psychological level of $5,000.

Data tracked by Swiss-based analytics firm Laevitas shows there are currently 1.02 million call option contracts ($4.8 billion) open on the Deribit exchange – perhaps a record figure and twice more than the put option tally of 426,950 ($2 billion).

The big gap reflects top-side bias. “[That’s] pretty bullish positioning,” Amber Group said in a Telegram chat. “skew is favoring topside as well.” Traders buy call options to bet on price increases and seek downside protection via puts when anticipating a correction.

Both short-term and longer-duration calls are drawing higher prices than puts at press time, as evident from the negative one-week, one-, three- and six-month put-call skews. Put-call skews measure the cost of puts relative to calls.

As seen below, the majority of open interest is concentrated in the so-called out-of-the-money or higher strike call options. On Deribit, the world’s largest crypto options exchange by volume and open interest, one ether options contract represents 1 ETH.

Ether: options open interest by strike (all expirations) (Laevitas)

Call options at $5,000, $10,000, and $15,000 account for nearly 300,000 in open positions.

According to QCP Capital, increased buying in the $15,000 call has been driven by last month’s high conviction recommendation by Real Vision Founder Raoul Pal.

“On Deribit, you can buy the March 2022 [expiry] $15,000 calls for around $167 [premium paid to purchase call],” Pal said in a note to clients, according to QCP Capital’s Telegram broadcast dated Oct. 28.

Raoul Pal's ETH $15K call recommendation via QCP's Telegram broadcast (Real Vision, QCP Capital)

Pal called the trade a lottery ticket, meaning the maximum loss a buyer would suffer is limited to the extent of the premium paid for a single contract, i.e., $167. At the same time, profit can be huge if ether rallies to $15,000 or more.

“If it goes to $20,000, you make 28x. If it goes to $40,000, you make 85x,” Pal said.

Traders have been buying cheap out-of-the-money call options since the first quarter in a bid to make millions on a relatively small investment.

Ether, the native token of Ethereum’s blockchain, is currently trading at record highs near $4,800, representing a 550% year-to-date gain versus bitcoin’s 134% rally.

Investors have been snapping up ether in recent weeks on expectations that U.S. regulators would approve an ETH futures-based exchange-traded fund (ETF).

“Our flow report again shows a stronger bid [bullish] side bias for ETH (55.6% buying) over BTC (51.7% buying),” Adam Farthing, chief risk officer at crypto liquidity provider and over-the-counter trader B2C2 Japan, said in a weekly note published Monday.

Crypto market flows at B2C2 for the week ended Nov. 7 (B2C2)


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.

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