Yahya 
The price of Ethereum on May 20 jumped over 18%, hitting a two-month high of $3,700. This massive increase was caused by high hopes for an acceptance of a spot Ethereum exchange traded fund (ETF). Eric Balchunas, a senior analyst at Bloomberg, increased the approval rate from 25% to 75%, and he said that the dynamics could change considering the forthcoming political pressure on US Securities and Exchange Commission (SEC).
Balchunas made a comment that “The earlier position of SEC hinted little engagement towards ETF applicants, but recent moves demonstrate that they might be feeling the heat.” He also told that the SEC is said to ask exchanges like NYSE and Nasdaq to redo their filings, although no official notice has been given by the regulator.
Analysts Weigh In on SEC Decision
However, Nate Geraci, ETF Institute co-founder and ETF Store president, emphasized the difficulty in the approval process. Geraci notes that, “The SEC can finalize exchange rule changes apart from the fund’s registration which could extend the decision beyond the May 23 deadline of VanEck’s Ethereum spot ETF request.”
This postponement allows the SEC to further examine the documents, given the risks tied to Proof-of-Stake (PoS) cryptocurrencies. The expectancy around the ETF verdict has clearly raised the attention towards the weekly and monthly ETH option expiries.
Options Market Reacts to Price Surge
The top derivatives exchange, Deribit, records Ether options open interest for May 24 at $867 million, and for May 31, this amount surges at $3.22 billion. Unlike, CME’s monthly ETH options open interest is $259 million, whereas for OKX is $229 million.
Bullish sentiment can be seen among traders at Deribit through the call-to-put ratio which heavily favours call options. If Ether’s price is higher than $3,600 by May 24, just $440,000 out of the put positions will be justified. The holders of call options up to $3,600 will exercise their call, creating expensive open interest position of $397 million in favor of the buy.
The bets are now focused on the monthly expiry for May 31. If the price of Ether is over $3,600, 97% of the put options will become irrelevant, resulting in a significant majority of call options. An example is that when the price of Ether is at $4,550, the net open interest will be call options by $1. 92 billion.
Moreover, the price of Ether jumped by 18% unexpected which left option traders unawares and set the scene for remarkable earnings with bullish strategies. Such profits are expected to be reinvested which will support the positive trend of the price of Ether after the expiry.