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Ethereum’s $1.5B Option Expiration on June 25 Will Be a Make-or-Break Moment


Ether on June 25 (ETH) will face its biggest option expiration in 2021 as $1.5 billion worth of open interest will be settled. This figure is 30% larger than March 26 end, which happened as Ether price fell 17% in 5 days and came down near $1,550.

However, Ether climbed 56% after the March options expiry, reaching $2,500 within three weeks. These moves were completely unrelated to bitcoin (B T cTherefore, it is necessary to understand whether the same market structure can operate for the June 25 futures and options expiration.

Ether price, USD, on Bitstamp in March 2021. Source: TradingView

Recent history shows a mix of bullish and bearish catalysts

on March 11, Ether Miners EIP-1559 . organized a “show of force” against, which will significantly reduce their revenue.

The situation worsened on 22 March, as CoinMetrics launched the “Ethereum Gas Report”, which stated that Highly anticipated EIP-1559 network upgrade unlikely to solve high gas problem.

Things started to change on March 29, like Visa announces plans to use Ethereum blockchain to settle transactions made in fiat, and on 15 April, Berlin Upgrade Successfully Implemented. According to Cointelegraph, after the Berlin debut, “average gas fees began to drop to more manageable levels.”

Before jumping to conclusions and speculating whether these events of Ether price bottoms near the upcoming $1.5 billion options expiry are bullish or bearish, it is best to analyze how the larger traders are positioning .

Ether options open interest until the expiration date. Source: Bybt

Note how the June expiration holds over 638,000 ETH options contracts, which account for 45% of the total open interest of $3.4 billion.

Unlike futures contracts, options are divided into two segments. Call (Buy) options allow the buyer to receive Ether at a specified price on the expiration date. Typically, they are used on neutral arbitrage trades or bullish strategies.

Meanwhile, put (sell) options are commonly used to hedge or hedge against negative price swings.

Open interest from June 25 ether options strike. Source: Bybt

For bulls, $2,200 is the line in the sand

As shown above, there is a disproportionate amount of call options on strikes $2,200 and above. This means that if the price of Ether breaks below this level on June 25, 73 percent of neutral-to-bullish options will become worthless. There are 95,000 call options still running which would represent $228 million of open interest.

On the other hand, most protective put options have been opened at $2,100 or lower. As a result, 74% of those neutral-to-bearish options will be worthless if the price stays above this level. Therefore, the remaining 73,700 put options would represent open interest of $177 million.

It seems premature to say who might be the winner of this race, but given the current $2,400 price of Ether, it seems that both sides are reasonably comfortable.

However, traders should keep a close watch on this event, especially considering the impact of prices around the end of March.

The views and opinions expressed here are those of Author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should do your own research when making a decision.





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