Title: Ethereum Volatility May Spike Massively Today, Here's Why

Aug 26, 2022 10:06 AM ET

By: AnalysisWatch

For the past six days, the average daily volatility for Ethereum has been at a relatively low level after the sudden price drop that occurred on August 19. The period of low volatility is likely to end after we see the expiration of options, which usually correlates with large spikes in market volatility.

Derivatives worth a total of $1.1 billion will expire today, including more than 400,000 calls and 330,000 puts. The maximum pain price for options on August 26 is $1,500, which means the currency has more chances to swing toward the lower price of $1,652.

According to the distribution of open interest, options traders did not believe in Ethereum's ability to reach higher levels like $2,000. Despite the overwhelming number of calls, many positions were opened as a hedge against a potential spike in volatility.

As for September options, traders are mostly "betting" that Ethereum will stay around the price we see in the market today, with the maximum pain price remaining at $1,600, although we may see some traders opening contracts for $10,000 ETH. Traders shouldn't be confused by this, as someone may be using the extremes to hedge their large short positions or for some other unconventional reason. Ethereum price performance.