The recent stabilization of Ether (ETH) around $3,500 has significantly reduced the market’s hopes for a monthly options expiration above $4,000. Initially, bulls were feeling optimistic due to the possibility of regulators approving a spot Ethereum exchange-traded fund (ETF), leading to a 23% increase in value on May 20. However, since then, the price of Ether has struggled to maintain levels above $3,600.
A total of $3.5 billion in monthly ETH options is set to expire on June 28 at Deribit, the leading exchange, followed by $286 million at OKX, and $142 million at Binance. However, with the United States Securities and Exchange Commission (SEC) still reviewing the S-1 filings from ETF providers, the chances of bullish bets exceeding $4,000 remain slim.
Ether bears were not expecting the cryptocurrency to surpass $3,000, while Ether bulls did not foresee the delay between the regulatory approval of the spot ETF and its actual trading commencement, as confirmed by SEC Chair Gary Gensler. Due to this lack of momentum, the optimistic bets for the June 28 options expiration are unlikely to pay off.
At the same time, Ether bears were surprised when the SEC concluded its investigation into whether Ether could be classified as a security, as stated in a letter to ConsenSys. This decision means ConsenSys is no longer under scrutiny for potential ETH sales.
The open interest for Deribit’s June 28 monthly options expiration stands at $3.5 billion, but the actual outcome is expected to be lower, as prices above $4,000 and below $3,000 are currently seen as unrealistic.
The 0.62 put-to-call ratio indicates an imbalance between the $2.2 billion call (buy) open interest and the $1.3 billion put (sell) options. However, if Ether’s price remains around $3,500 at 8:00 am UTC on June 28, only $257 million worth of these put options will be relevant. This is because the right to sell Ether at $3,300 or $3,400 becomes irrelevant if ETH trades above these levels at expiration.
Below are the four most likely scenarios based on the current price trends and the availability of options contracts for calls and puts on June 28:
Between $3,200 and $3,400: There are 13,000 calls versus 97,200 puts, favoring the put options by $280 million.
Between $3,400 and $3,600: There are 43,900 calls versus 41,600 puts, resulting in a balance between call and put options.
Between $3,600 and $3,800: There are 104,200 calls versus 24,400 puts, favoring the call options by $300 million.
Between $3,800 and $3,900: There are 141,600 calls versus 9,600 puts, increasing the advantage for call options to $500 million.
This rough calculation assumes that call options are used primarily for bullish bets and put options for neutral-to-bearish positions. However, this simplification does not account for more intricate investment strategies.
Unless there is an unexpected approval of a spot ETF before June 28, the likelihood supports a balanced result around $3,500. This should be seen as a win for the bears, especially considering that Ether was trading above $3,800 just two weeks prior.
This article does not provide investment advice or recommendations. Every investment and trading move carries risk, and readers should conduct their own research before making a decision.