For the last six days, the average daily volatility for Ethereum was at a relatively low level following the sudden price plunge that happened on Aug. 19. The low volatility period will most likely come to an end after we see an options expiry, which usually correlates with large volatility spikes on the market.
A total of $1.1 billion worth of derivatives is going to expire today, with more than 400,000 calls and 330,000 puts. The max pain price for August 26th options is $1,500, which means the asset has more chances to swing toward the lower price from $1,652.
According to open interest distribution, options traders did not believe in Ethereum's ability to reach higher levels like $2,000. Despite the prevailing number of calls, many positions have been opened as hedges against the potential spike in volatility.
As for September's options, investors are mostly "betting" on Ethereum remaining around the price we see on the market today, with the max pain price staying at $1,600, though we can see some investors opening $10,000 ETH contracts. Traders should not be confused by it as someone might use extreme values for hedging their large short positions or for any other unconventional reason.
Ethereum's price performance
Despite the unsuccessful attempt to reach the local peak of $2,000 and the following reversal, Ether is still moving in the local uptrend and holding above the 50-day moving average, which as an important condition to be met.
At press time, the second biggest cryptocurrency is trading around $1,654 and showing a 2.4% price correction in the last 24 hours. The expiry of the aforementioned options will happen today.
Denys Serhiichuk
Gamza Khanzadaev
Tomiwabold Olajide