NYDIG: "ETH market value surpasses BTC" is about to happen? What does the surge in Ethereum options mean?
Originally written by GREG CIPOLARO
Original compilation: GaryMa Wu said blockchain
Summary
Summary
ETH led the rise, market trading activities were active, and the topic of "ETH's market value surpassed BTC" reappeared.
ETH options trading increased, especially up call options.
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"ETH market value surpasses BTC" is about to happen?
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Options traders trade consolidation expectations
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Put/Call Ratio Shows Growth in Call Options Trading
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Expiration dates may hold clues to the path of events
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Out-of-the-money call options reveal important price levels
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Public analysis misses the point
The public media has been quick to capture ETH's growing options activity and conclude that traders have gone wildly bullish ahead of the consolidation and that ETH has surpassed BTC in terms of options activity. Having said that, an important nuance in the analysis of trading activity that is overlooked here is that traders can sell call options as well as buy them. A call option represents the right to buy an underlying asset at a specific price within a specific time period. Buying calls is a way for traders to express a directional view without expending capital to buy the same spot risk. When trades are executed on an exchange like Deribit (accounting for over 90% of options trading volume), each trade is marked as"or"or"Sell". This may seem strange since all transactions involve both buying and selling. However, based on the price at which the trade was executed and the order book, it can be inferred whether the originator of the trade wanted to buy or sell options. Executing trades at quotes means that active traders express market opinion by buying from market makers who simply want to make money by providing liquidity. Therefore, when a trade is executed on the ask or ask side of the market, it is marked as"buy", while executed on the bid side of the market is marked as"sell"。
If all we see in trading activity is"buy", we would come to a similar conclusion to the media that traders were wildly bullish on the merger. In reality, however, the data shows that in addition to buying, there was a large number of short calls, which still resulted in volume and open interest growth, but it was a very different trade. Overall, according to Deribit data, the market is broadly executing the so-called"Butterfly"Summarize
Summarize
The consensus in the public media is that before the merger, the trading surface seemed very bullish for ETH, and indeed, traders were buying upside call options to take advantage of a potential price surge. However, the degree of bullishness may be overstated. Much of the open interest is tied to larger options portfolios that show a more nuanced view of price. We will continue to monitor our positioning closely in the coming weeks as the merger date draws closer.
