Ether (ETH) flirted with its $4,380 all-time high on Oct. 21 but failed to breach it by a few dollars. Some analysts, including independent market analyst Scott Melker, believe that an exchange-traded fund (ETF) approval is the next logical step for the U.S. Securities and Exchange Commission (SEC).

However disappointed Ether bulls might be, they are likely to score a $78 million profit on Oct. 22’s options expiry. Bears were apparently caught off-guard as Ether accumulated a 35% gain month-to-date.

Investor sentiment was also positively impacted by the pension fund for firefighters in Houston, which announced a $25 million allocation in Bitcoin (BTC) and Ether.

The constant reduction of Ether’s liquid supply is also a key factor behind the recent rally. According to Glassnode data, the Ether balance on exchanges reached a 2-year low.

Having fewer coins deposited on exchanges, especially for Ether, could mean that investors are moving to decentralized finance (DeFi) in search of better yields. Although it doesn’t prevent anyone from selling, this movement does create incentives for long-term holding, and so does the ETH 2.0 stake to become a validator.

Bears were stunned after Ether broke $4,000

Ether was trading below $3,000 just three weeks ago and this partially explains why bears placed 89% of their bets on Ether trading at $4,000 or lower on Oct. 22.

Friday’s expiry total open interest is represented by $230 million calls (buy) options stacked against $195 million puts (sell) options, a 27% lead for the neutral-to-bullish instruments. Still, this generalistic view needs further detail, depending on the expiry price.

The current long-to-short metric is deceptive because the recent Ether rally will likely wipe out most of their bearish bets. For example, if Ether’s price remains above $4,000 at 8:00 am UTC on Friday, only $22 million of the put (sell) options will be available.

Bears need sub-$4,000 to balance the scales

Any expiry price above $4,000 favors the bulls, although most damage occurs above $4,200 as their net profit increases to $136 million.

Below are the four likeliest scenarios considering the current price levels. The data shows how many contracts will be available on Oct. 22 for both bulls (call) and bear (put) instruments.

  • Between $3,600 and $4,000: 15,640 calls vs. 14,340 puts. The net result is neutral.
  • Between $4,000 and $4,200: 25,000 calls vs. 5,440 puts. The net result favors bulls by $78 million.
  • Between $4,200 and $4,400: 34,180 calls vs. 1,890 puts. Bulls’ profit increases to $136 million.
  • Above $4,400: 44,230 calls vs. 60 puts. Bulls completely dominate by profiting $186 million.

As shown above, the imbalance favoring either side represents the potential theoretical profit from the expiry.

This crude estimate considers call (buy) options used in bullish strategies and put (sell) options exclusively in neutral-to-bearish trades. However, a trader could have sold a put option, effectively gaining a positive exposure to Ether above a specific price. Unfortunately, there’s no easy way to estimate this effect.

$4,000 is likely to hold, at least until Friday’s expiry

Bears need a 3% correction from the current $4,100 price to avoid a $78 million loss. Although it might not seem much at first, traders must also account for recent positive newsflow and on-chain metrics.

With less than 10 hours ahead of the Oct. 22 expiry, bulls are likely to secure a win by keeping Ether above $4,000. As for the bears, focusing on the $1.1 billion monthly expiry on Oct. 29 seems to be the most logical route.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.