Ether (ETH)’s recent consolidation around $3,500 has significantly reduced market expectations of a monthly option expiration above $4,000. Initially, bulls were bullish on the possibility of regulators approving spot Ethereum exchange-traded funds (ETFs), which led to a 23% rally on May 20. However, since then, the price of Ether has failed to maintain the above levels. $3,600.
A total of $3.5 billion in monthly ETH options are scheduled to expire on June 28 on major exchange Deribit, followed by $286 million on OKX and $142 million on Binance. Nonetheless, it remains unlikely that the bullish bet will exceed $4,000 as the U.S. Securities and Exchange Commission (SEC) continues to review the ETF provider’s S-1 filing.
Bears did not expect Ethereum to exceed $3,000.
Ether bulls did not expect a delay between regulatory approval of a spot ETF and the start of actual trading, SEC Chairman Gary Gensler confirmed. The exact timing within the next three months is unclear. Due to this lack of momentum, bullish bets on the June 28 option expiration are unlikely to pay off.
At the same time, Ether bears were surprised after a key regulatory concern for investors was resolved on June 19 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 that Consensys will no longer be under scrutiny for potential ETH sales.
Deribit’s open interest for monthly options expiration on June 28 is $3.5 billion. However, the current price of more than $4,000 and less than $3,000 is considered unrealistic, so the actual result is expected to be lower than this.
A put-call ratio of 0.62 represents an imbalance between $2.2 billion of call (buy) open interest and $1.3 billion of put (sell) options. Nonetheless, with the price of Ether hovering around $3,500 at 8 AM UTC on June 28, only $257 million worth of these puts will be relevant. This discrepancy occurs because if ETH trades above this level at expiration, the right to sell Ether at $3,300 or $3,400 becomes meaningless.
Bulls are targeting $3,800 for a profit of $500 million.
Below are the four most likely scenarios based on current price trends. Availability of the June 28 call and put option contracts depends on the settlement price. The potential balance of benefits for each side is explained as follows:
- $3,200~$3,400: There are 13,000 call options and 97,200 put options. The net result favors the put option by $280 million.
- $3,400~$3,600: There are 43,900 call options and 41,600 put options. The result is roughly balanced between call and put options.
- $3,600~$3,800: There are 104,200 call options and 24,400 put options. The net result is that the call (buy) option is $300 million more advantageous.
- $3,800~$3,900: There are 141,600 call options and 9,600 put options. The benefit of the call option increases to $500 million.
Related: SEC suspends Ethereum investigation to avoid ’embarrassing’ court case
This rough calculation assumes that call options are primarily used for bullish bets and put options are used for neutral to bearish positions. However, these simplifications do not account for more complex investment strategies.
Unless there is an unexpected approval of a spot ETF before June 28, odds support a balanced outcome around $3,500. This should be seen as a win for the bears, especially considering that Ethereum was trading above $3,800 just two weeks ago.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.