Many novice traders simply follow spot prices on the major crypto exchanges to gauge the direction price might take. However, reviewing options markets data can provide additional relevant insights on market sentiment.
Looking at the most recent activity in Bitcoin options, it is clear that some trades occurred on strikes that seemed improbable even for the most bullish analysts. These trades include 20 BTC CME December call options with a $70,000 strike and the 56 BTC worth of $100,000 December strikes at LedgerX.
These anecdotal trades might not reflect the broader market conditions, but oddly enough, the highest Ether options contract for Dec 2020 stands at $1,120. This trade is undoubtedly bullish considering there are only 42 days left until expiry, but not even close to the BTC options pending 330% upside or higher.
It is worth noting that Deribit also holds Ether call options for March 2021 with strikes trading up to $1,600. Although this effect might have been caused by the ETH 2.0 launch date on Dec. 1, its upside stands at 230%. This is considerably lower than Bitcoin’s options.
As the data above shows, out of the $613 million in Ether options open interest, a mere 28% stands at $460 and higher. This situation can be partially explained by the 23% rally that occurred over the past ten days, indicating that traders were not expecting these prices.
It’s also important to remember that options until March 2021 are listed on most exchanges. Therefore some optimism ought to be expected for the more distant dates. Buying options for prices way above the market level is relatively cheap. The $600 ETH call option for January 2021 was trading at $12 just two weeks ago.