The ether (ETH) market is sparking conversations as an investor speculated to be a whale, owing to the massive capital clout, has been seen trading substantial call options. Specifically, the investor has acquired close to 92,600 ETH call option contracts valued at about $150 million on crypto trading platform, Deribit, as reported by options data tracking site Greeks.Live.
Rating the stance by Greeks.Live, this whale’s activity encompasses $150 million in notional ETH calls, which were all ‘naked buys’. This showcase of seemingly-unabashed long-term bullish anticipations crisply points out that a call buyer has a largely optimistic outlook on the market. Intriguingly, the speculative undertaking of a ‘naked position’ does not promise insulation against negative shifts in the underlying asset’s price.
While this is enlivening for some proponents, others might view it somewhat critically. This is due to the large flow being mostly associated with out-of-the-money (OTM) calls – calls with strike prices appreciably exceeding ether’s current market price of $1,633. Over 40,000 contracts of December-expiry ETH calls were placed at $2,200, and nearly 50,000 contracts of those expiring in October were at $2,000. Transactions of this magnitude, often negotiated over the counter, are considered a mirror of institutional activity.
This wave of activity occurs during a somewhat gloomy phase for ETH. Ether hit a six-month low of $1,532 last week, an occurrence blamed on traders bracing for FTX, a beleaguered digital assets exchange, to take drastic actions concerning its multibillion-dollar cryptocurrency holdings. From that low point, ether has since rallied to $1,634 and making a 36% rise this year.
As per data from research outfit RxR, the cryptocurrency is trading at a neat 27% discount to its fair value. This assessment is based on Metcalf’s law model, which considers the burgeoning active user adoption on both the mainnet and the layer 2 scaling solution.
While this clearly points to the faith of some whales in the future of the ether market, it also subtly lays bare the potential hurdles, notably the bare positions and complex price dynamics, which may spook some investors. These undercurrents set the stage for a thrilling journey ahead in the ether landscape.
Source: Coindesk
