ETH News Today – ETH Price Surges on Rumors: Unveiling the Trends in Ethereum Options Trading

ETH News Today – Spot ETF Speculation Sends Ethereum Price Soaring: A Look into ETH Options Market

Crypto News- ETH News Today: On May 20, Ether (ETH) surged over 18%, climbing to $3,664, after Bloomberg senior analyst Eric Balchunas raised the approval odds for the Ethereum exchange-traded fund (ETF) from 25% to 75%. Balchunas suggested that the United States Securities and Exchange Commission (SEC) is under political pressure, as its previous approach showed little engagement with ETF applicants. He also mentioned that the SEC has been asking exchanges like the NYSE and Nasdaq to update their filings, although there’s no official confirmation from the regulator.

Nate Geraci, co-founder of the ETF Institute and president of the ETF Store, noted that while a final decision on the registration requirement for individual funds (S-1s) is still pending, the SEC might approve the exchange rule changes (19b-4s) separately from the funds’ registration. This could technically delay the approval beyond the May 23 deadline for VanEck’s Ethereum spot ETF, giving the regulator more time to review these complex and risky proof-of-stake (PoS) cryptocurrency structures.

Impact on the Upcoming $3 Billion ETH Options Expiry

The speculation surrounding spot Ethereum ETFs has significantly increased interest in the upcoming weekly and monthly ETH options expiries. At Deribit, the leading derivatives exchange, Ether options open interest for May 24 is $867 million, while for May 31 it reaches an impressive $3.22 billion. In contrast, CME’s monthly ETH options open interest is just $259 million, with OKX at $229 million.

The call-to-put ratio at Deribit strongly favors call (buy) options, indicating that traders are more active in purchasing these than put (sell) options.

If Ether’s price stays above $3,600 on May 24 at 8:00 am UTC, only $440,000 of the put instruments will be in play. Essentially, a right to sell ETH at $3,400 or $3,500 becomes irrelevant if it trades above these levels.

Meanwhile, holders of call options up to $3,600 will exercise their right, securing the price difference. This would result in a substantial $397 million open interest favoring call options if ETH remains above $3,600 at the time of the weekly expiry.

The stakes are even higher for the monthly ETH expiry on May 31. Here, 97% of the put options are priced at $3,600 or lower, rendering them worthless if Ether’s price exceeds this threshold.

Bullish Strategies Reap Benefits from ETH Rally

Although the final outcome might not reach the potential $3.22 billion open interest, it will significantly favor call options. For instance, if Ether’s price hits $4,550 on May 31, the net open interest will favor call options by $1.92 billion

. Even at $4,050, the difference remains favorable to the call options by $1.44 billion.

It’s important to note that traders could have also employed more complex strategies. For example, selling put options gains positive exposure to Ether once it surpasses a certain price. Similarly, a seller of call options benefits when ETH’s price falls. However, estimating the overall effect of these intricate strategies is not straightforward.

Ultimately, Ether’s unexpected 18% increase took option traders by surprise, setting the stage for significant gains for bullish strategies. These profits are likely to be reinvested, maintaining the positive momentum, which bodes well for Ether’s price following the expiry.

In conclusion, the recent surge in Ether’s price, fueled by increased optimism around the approval of an Ethereum spot ETF, has created a highly favorable environment for call options in the options market. As traders navigate the upcoming expiries, the bullish sentiment appears to be well-supported, potentially leading to sustained upward pressure on ETH prices.

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