The first half of the year saw Ether (ETH) rising by a remarkable 61%. As we transition into the second half, traders are anticipating that the bullish trend could continue.
Last Friday, an investor acquired approximately 63,250 "bull call spreads" linked to Ether, set to expire on Dec. 29, as reported by data analytics platform Amberdata. This investment strategy involved selling a call option at the $2,500 strike price to help fund the purchase of a call option at the $1,900 strike.
The trading entity had to part with an initial $10 million as it paid more to buy the $1,900 call than it received from selling the $2,500 call. In this arrangement, a call buyer is protected by the seller against price rallies, while the call seller gets an upfront premium from the buyer.
Greg Magadini, director of derivatives at Amberdata, commented on this development in a recent newsletter. "For Ethereum to highlight call spread $1,900-$2,500 on December for around $10M of net premium paid: MASSIVE," he stated.
Anticipation building in the market
Magadini noted that the selected strike prices suggest a predominant desire for bullish directional exposure. One Ether options contract corresponds to one ETH.
According to Amberdata's block trade tracker, large ETH bull call spreads were noted on Friday. Bull call spreads, or bullish vertical spreads, are popular in both traditional and crypto markets because they limit potential losses and profit.
The strategy turns profitable as Ether's price ascends, although the profit potential is capped at the difference between the strike prices, minus the initial cost pair. Conversely, the strategy will result in a loss if Ether's value falls below $1,900 by the end of December. However, the potential loss is limited to the extent of the initial cost paid.
This suggests that the buyer of the bull call spread likely anticipates a steady Ether price increase in the next six months.
"Bullish call spreads are typical directional trades," commented Chang, a partner and analyst at crypto data tracking platform Greeks.Live. However, he also noted that increased interest in these strategies does not automatically guarantee an Ether rally. Matrixport, a crypto services provider, asserts that Ether is due for a substantial upward move.
At press time, Ether was trading at $1,966, its highest since May 6. Matrixport's head of research and strategy, Markus Thielen, expressed his optimism: "During the mid-June 223 lows, we got a buy signal when Ether traded at $1,700. Now at $1,920, prices have rallied, but we think the chance for an explosive move higher has arrived. Ether could catch up with Bitcoin."
In the first half, Bitcoin rallied by nearly 85%, vastly outperforming many other cryptocurrencies. The options market appears to be collectively bullish on both Ether and Bitcoin, with short-term and long-term call-put skews showing positive values at press time. These skews indicate the cost of calls, which reflects bullish sentiment, relative to bearish puts.
