Market traders gambled as ether fell to a 10-day low on Monday, providing insurance against a further drop in the second-largest cryptocurrency.
According to Swiss-based data tracking firm Laevitas, a trader or a group of traders purchased over 36,000 contracts of Deribit-listed ether, where more than 20,000 of which were banned on institution-focused over-the-counter tech platform Paradigm. The put option investors would profit if ether fell below USD 2,200 by March 18. This is about a 13 percent drop from the current market price of USD 2,514.
Deribit, the largest crypto derivatives exchange by trading volumes and open positions, and Paradigm launched an institution-focused block-trading service.
On Deribit, an ether offer equals one ETH. The put option grants the buyer the right, but not the duty, to trade the underlying asset at a fixed price on or before a particular date. A put option buyer is inherently negative on the market, whereas a call option buyer is optimistic.
According to Laevitas, the majority of trades in the $2,200 put on Monday were simple longs and did not count as part of a complicated options plan. “Many of them were outright transactions, maybe short-term hedges”.
Ether has been declining since November. In late January, sellers ran out of steam at USD 2,200. Since late January, the options market has been persistently bearish across all periods, with the one-week, one-, three-, and six-month put-call skews all showing positive values. Put-call skews are a measure of the cost of puts in comparison to calls.