Ethereum Options Market Faces Gamma Squeeze Pressure
The Ethereum options market on Deribit is experiencing a gamma squeeze due to aggressive call buying at strikes around $3,000. This has led to a feedback loop where market makers must buy more ETH to maintain delta-neutral positions, pushing prices higher.
The September options market holds 756,100 ETH in open interest with a total notional value of $1.92 billion. The highest call open interest is at the $3,000 strike with 43,000 contracts.
Deribit maintains 85% market share among crypto-native exchanges and has processed the majority of crypto-native volume. The Ethereum put-to-call ratio is 0.57, meaning calls outnumber puts by nearly two to one.
The gamma squeeze will end when call premiums become too expensive or buying volume slows, causing dealer flows to flip from buying to selling their hedges, which would lead to a collapse in volatility and prices dropping.