Ether Options Traders Go Wildly Bullish After London
  Everything you need to make sense of the crypto markets and beyond By the CoinDesk Markets Team Edited by Lawrence Lewitinn, Managing Editor, Global Capital Markets August 6, 2021 Sponsored by  (Price data as of August 6 @11:00 UTC) If you were forwarded this newsletter and would like to receive it, sign up here.
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Market Moves by Omkar Godbole Ether Options Activity Increases as London Hard Fork Goes Live, $50K Call Most Popular The level of activity in the ether (ETH) options market is picking up as traders speculate on the impact of Ethereum's London hard fork. The bulk of the activity is concentrated in the higher strike, longer duration calls, or bullish bets.
Data provided by Switzerland-based Laevitas shows ether volumes on Deribit, the largest crypto options exchange, have increased by more than 50,000 ETH to 153,000 ETH ($424 million) in the past 24 hours. That takes it to the highest level since the end of May. On Deribit, one ether options contract represents 1 ETH.
Activity at the over-the-counter (OTC) desk Paradigm has also doubled to 42% of the global market share in the past 24 hours, co-founder Anand Gomes told CoinDesk in a Telegram chat. "London hard fork is driving this activity, it's mostly institutional," Gomes said.
Deribit and Paradigm introduced an institution-focused block-trading service two years ago. Trades facilitated by Paradigm are automatically executed, margined and cleared at Deribit.  Ether options volume on dominant exchange Deribit (Source: Laevitas, Deribit) Overall, call options have registered higher activity than puts, and the most popular options have been calls expiring March 2022 with strike prices of $50,000 and $40,000.
A call option gives the purchaser the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date. That means call options offer insurance against bullish moves while puts offer insurance against a price drop.  Call and put option volume by strikes (all expirations) (Source: Laevitas, Deribit) The data show 12,790 contracts of the $50,000 call expiring in March have changed hands in the past 24 hours. The $40,000 call has seen a volume of 12,520.
Bullish flows
Most of the volume came through Paradigm, where someone, mostly an institution, traded 12,500 contracts of $40,000 and $50,000 calls.
"There was a flurry of call buying and put selling after the London fork," said Darius Sit, CEO of Singapore-based QCP Capital. "Of particular note was large buying interest in tail strike calls such as a $40,000/$50,000 ETH bull call spreads that were traded with us. A total of 12,500x contracts were traded. We had to take a second look at the screen to make sure those were ETH strikes and not BTC!"
A bull call spread involves buying call options at, below or above the spot market price and selling an equal number of calls with the same expiry at a higher strike price.
In this case, the market participant took the bull call spread by purchasing 12,500 contracts of the March expiry $40,000 call and simultaneously selling 12,500 contracts of the $50,000 call. QCP Capital was the market maker.
The bull call spread is a limited-risk, limited-reward strategy designed to benefit from an increase in the price of an asset. The maximum profit is earned if the asset expires at or above the short call's strike price, that is $50,000 in this case, on the settlement day. Ether is currently trading near $2,750, and would need to surge 1,718% to hit $50,000. The maximum loss is limited to the net premium paid while setting the strategy.
The bullish mood is also evident from the negative one-week, one-, three- and six-month put-call skews, which measure the cost of puts relative to calls.  Ether put-call skews (Source: Skew) The data show investors are buying the narrative that the London hard fork implemented on Thursday will curb supply growth over time, yielding a price rally.
According to ethburned.info, around 10,000 ETH have been mined and 4,400 ETH have been burned or destroyed since the hard fork implementation, leading to a net supply reduction of 40%. Read the original story here: Ether Options Activity Increases as London Hard Fork Goes Live, $50K Call Most Popular
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Technician's Take by Damanick Dantes, CMT  Bitcoin Returns Above $40K; Faces Resistance at $45K-$50K Bitcoin (BTC) is testing resistance near $40,000 after several breakout attempts over the past three months. The short-squeeze rally lost some momentum this week, although downside appears limited around the $34,000 to $36,000 support zone.
The next level of resistance is seen at the 200-day moving average near $45,000. A successful breakout would yield an initial upside target towards $50,000-$55,000.
Bitcoin was trading around $40,600 at press time and is up 6% over the past 24 hours.  Bitcoin daily price chart shows support and resistance levels with RSI (Source: TradingView)
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"First Mover" looks into Ethereum's London hard fork activated just moments ago. This comes as the community seeks to reduce Eth supply and improve gas fees. What does that mean for Ether's price in the short and long term and the wide industry as a whole? Plus, the discussion around the crypto tax rules included in the new infrastructure bill continues. Blockchain Association Executive Director Kristin Smith, Fairlead Strategies Founder and Managing Partner Katie Stockton and CoinDesk's Christine Kim join the discussion.
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