- Ethereum options contract worth $415 million will expire on Deribit on Sept. 25.
- A large volume of open interest increases the expectations of price volatility.
- At current prices, most options traders are expected to lose money.
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Ethereum Options Traders Anxious Before Expiry
Deribit is the leading portal for options contracts on Bitcoin and Ethereum with 75% and 92% market share, respectively.
At current prices, options buyers on Deribit are expected to lose money. Many call option contracts bought around the $340 strike price will be worthless at expiration.
Options contracts buyers are given the right (but not the obligation) to buy or sell an underlying asset at a specified date in the future. These rights are bought with a one-time payment of premium for each contract. Gains are possible only if the profits exceed the premium.
On Sept. 25, 2020, if the price of Ethereum falls to $60, then traders holding put options would still be able to sell their coins at the strike price of the contract, reaping a nice profit. Similarly, ETH at $600 would reward those holding call options, allowing contract holders to buy coins at the lower contract price. However, if ETH remains at $340, it would result in losses for both calls and put buyers. The sellers of these options, nevertheless, would end up making money on the premiums.
The put/call ratio of 0.84 suggests that the options market currently leans bullish with a high volume of unsettled call options at a strike price between $400-$560. Options contracts are often bought to hedge against spot or mining exposure. Hence, losers on the options market will look to adjust their futures or spot exposure in…