Ethereum faces largest ever options expiry as bears appear to dominate

[Cristiano]

Ether (ETH) faces its largest options expiry ever on June 25 as nearly $1.5 billion out of $3.3 billion notional open interest (OI) in ETH options will expire. June’s expiry has over 638,000 ETH options contracts in its purview, accounting for 45% of the total open interest in these options.

Although it’s the largest options expiry in the history of the derivative product, the open interest in ETH options OI hit its all-time high of nearly $5.5 billion on May 20 soon after ETH had hit its all-time high of $4,362 on May 12.

The huge expiry amid the ongoing market-wide pull is indicative of increased interest in the ETH derivatives market despite the token trading in the $2,270 range, 47.61% lower than its all-time high from mid-May. Luuk Strijers, chief commercial officer of crypto derivatives exchange Deribit, told Cointelegraph:

“The put call ratio for the June expiry is 0.79, which indicates there are more calls outstanding versus puts (64,000 more). This is indeed indicative for bullish sentiment, however, the majority of this OI is held in contracts quite far away from the current ETH price, indicating a low likelihood of expiring in the money.”
Although, Robbie Liu, analyst at the Market Insights team of OKEx — a cryptocurrency exchange — pointed out what this gap in price indicates, “The expiry is still dominated by the bears since a significant amount of call options are a long way off the current price. For example, the largest OI is concentrated in strikes at the mark of $3,200 for call options.”

Call options contracts allow holders to buy Ether at a predetermined price on the date of expiry, while put options contracts allow them to sell Ether under similar pre-requisites. Under usual circumstances, call options are used to supplement bullish strategies, while put options are utilized as hedges against negative price movements of the underlying.

The max pain price for this record expiry is $1,920. This price being the point where the largest number of options are at a loss, it is highly unlikely that the price of ETH will drop more than 10% from its current trading range. Although, as witnessed on May 19, a day now more commonly known as Black Wednesday in the cryptoverse, seasoned investors would never say never.

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