October 27 Critical Date for Ethereum (ETH), Here’s Why
Significant Event in the World of Ethereum (ETH)
The 27th of October holds great importance for Ethereum (ETH) in the financial landscape. While it doesn’t involve any scheduled technological updates or platform announcements, it is set to witness a considerable event in the derivatives market.
Expire of ETH Call Options at $1,700 Strike Price
A total of 100,000 ETH call options are set to expire at the $1,700 strike price on this date. What makes this even more noteworthy is the cumulative total of over 400,000 call options at the same level. The overall value of the options expiring on the 27th of October reaches an impressive $1.3 billion. Such a high volume of options expiring calls for a closer examination.
Impact of Options Expiration on Price
Options, by their nature, provide holders the right to buy or sell an underlying asset at a predetermined price within a specified time frame. The expiration of options, especially in large volumes, has the potential to inject significant volatility into the asset’s price. This is due to potential hedging activities or the closing out of positions by institutional and individual traders.
Potential Buying or Selling Pressure
The mechanics of how options expiration can impact price are intricate. When the price hovers near the strike price of a significant volume of options nearing expiry, there can be considerable buying or selling pressure. Contract holders will either look to close their positions or allow them to expire worthlessly, depending on market conditions and individual strategies.
An Optimistic Price Trajectory
An examination of the daily chart leading up to the 27th of October suggests an optimistic price trajectory for Ethereum (ETH). The price movement has been predominantly upward, breaking past several resistance points. The moving averages indicate a bullish trend, with the shorter-term average crossing above the longer-term average, typically seen as a positive sign. However, with the impending expiration date, the potential for heightened volatility cannot be ignored.
This article was originally published on U.Today