Ether (ETH) has experienced a period of consolidation around $3,500, dampening expectations for a monthly options expiry above $4,000. Initially, bulls were optimistic due to the potential approval of a spot Ethereum exchange-traded fund (ETF), leading to a 23% gain on May 20. However, the price of Ether has since failed to maintain levels above $3,600.
Deribit, the leading exchange, has $3.5 billion in monthly ETH options set to expire on June 28, followed by $286 million at OKX and $142 million at Binance. However, the likelihood of bullish bets surpassing $4,000 remains low as the United States Securities and Exchange Commission (SEC) continues to review ETF providers’ S-1 filings.
Ether bulls did not anticipate the delay between regulatory approval and the actual trading commencement of the spot ETF, as confirmed by SEC Chair Gary Gensler. The exact timing of the ETF’s launch remains uncertain within the next three months. Consequently, the optimistic bets for the June 28 options expiry are unlikely to yield returns.
On the other hand, Ether bears were surprised when the SEC concluded its investigation into whether Ether could be classified as a security on June 19. This decision, outlined in a letter to Consensys, means that Consensys is no longer under scrutiny for potential ETH sales.
While Deribit’s June 28 monthly options expiry has an open interest of $3.5 billion, the actual outcome is expected to be lower since prices above $4,000 and below $3,000 are currently considered unrealistic.
The 0.62 put-to-call ratio indicates an imbalance between the $2.2 billion call open interest and the $1.3 billion put options. However, if Ether’s price remains around $3,500 at 8:00 am UTC on June 28, only $257 million worth of put options will be relevant. This discrepancy occurs because the right to sell Ether at $3,300 or $3,400 becomes irrelevant if ETH trades above these levels at expiry.
Based on the current price trends, there are four likely scenarios for June 28 options expiry. The availability of options contracts for calls and puts varies depending on the settlement price. The potential gains for each side are as follows:
1. Between $3,200 and $3,400: There are 13,000 calls versus 97,200 puts. The net result favors put options by $280 million.
2. Between $3,400 and $3,600: There are 43,900 calls versus 41,600 puts. The outcome is relatively balanced between call and put options.
3. Between $3,600 and $3,800: There are 104,200 calls versus 24,400 puts. The net result favors call options by $300 million.
4. Between $3,800 and $3,900: There are 141,600 calls versus 9,600 puts. The advantage for call options increases to $500 million.
It is important to note that this calculation assumes that call options are primarily used for bullish bets and put options for neutral-to-bearish positions. More complex investment strategies are not taken into account.
Unless there is an unexpected approval of a spot ETF before June 28, it is likely that the outcome will be balanced around $3,500. This can be seen as a victory for the bears, especially considering that Ether was trading above $3,800 just two weeks ago.
This article does not provide investment advice or recommendations. Readers should conduct their own research and make informed decisions when it comes to investing and trading, as all investments involve risks.