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A growing number of options traders are facing large unrealized losses due to Ethereum’s (ETH) latest price hike, once again highlighting the volatile and unpredictable nature of the cryptocurrency market.

Pankaj Balani, the CEO of Delta Exchange, a St. Vincent-based cryptocurrency derivatives platform, tells Cointelegraph that he has “observed a lot of naked call writing activity in ETH for deep money call options up to $ 2,000 and $ 3,000 strikes.”

A call option gets deep out of the money if the strike price is significantly higher than the current price of an underlying asset – in this case, Ethereum.

Balani said:

“Due to price increases, short call option positions lead to heavy unrealized losses, forcing option writers to buy more ETH to cover their short gamma exposure.”

Balani said traders were selling call options from strikes of $ 2,000 and above in December and January, thinking the price of Ethereum will not rise as quickly and their options would expire worthless.

“Chances are those sold options will not expire worthless,” he said.

As Ethereum moves higher, this scenario will only increase, forcing additional buying activity. In the options market, this feedback loop is called a gamma squeeze.

Delta Exchange generated more than $ 56 million in trading volumes Thursday, according to to branch data.

When asked whether ETH sellers have a GameStop-esque gamma squeeze, Delta said the two scenarios are not exactly the same, as the rise in GME was associated with orchestrated purchases. Ethereum, on the other hand, does not appear to have an orchestrated buying activity.

Ether passed $ 1,650 on Wednesday, on its way to new record highs. The rally appears to be a continuation of the bull market that started last year as Ethereum, Bitcoin (BTC) and the broader cryptocurrency market recovered.

Ethereum is also benefiting from the DeFi boom, with several high-profile projects building on top of the developer network. More than $ 32 billion trapped in the DeFi market, according to to the latest industry data.