Ether (ETH) bulls are demanding a healthy Ethereum rally as the June 27 monthly options expiry looms. According to the latest data, it is a positive outlook for the short term. According to Deribit — the largest exchange by market share with 72% — call options compose 63% of total open interest. This trend is further evidence of an extremely bullish sentiment among traders.
The way the put options are positioned indicates that over 90% of traders expect Ether to close below $2,700. If ETH is able to remain above this price level at expiry, 92% of these put options will expire worthless. This result would embolden the bullish view even more. This third scenario would result in massive profits for holders of call options.
Bearish Strategies in Play
Yet, while the broader picture is certainly bullish, bearish traders have recently been highly active using bearish strategies on Deribit. One of the most popular strategies being traded over the last two weeks is the “short risk reversal. This two-legged strategy includes a call away and a put deeper in the money, allowing positive returns if the underlying asset price moves sideways or drops.
The other well-known strategy is the bear diagonal spread, which is a more short-term bearish stance expressed in a cost-effective manner. You’re writing short-dated put options while purchasing longer dated puts at a lower strike. This strategy would let you profit from the time decay of the near-term options.
Options Expiry and Market Outlook
The majority of June 27 put options are targeting levels under $2,700. This indicates that many traders are wagering against Ether’s price going over this threshold. The impressive number of call options suggest a heavy bullish mood. At the same time, a large number of out-of-the-money puts are set to expire worthless, favoring neutral-to-bullish strategies and supporting ETH price appreciation.
As the largest exchange for crypto options, Deribit offers fantastic insight into market sentiment and positioning. The exchange’s rich data paints a beautiful picture of the raging bull – bear fight. The advance expiration on June 27 will be the first big test for both parties.
Bullish Momentum Prevails
The positioning in the Ether options market indicates that the bulls are getting hopeful ahead of the impending expiry. The size of the call option focus vs. put options is enormous. Coupled with the fact that most put options will likely expire worthless, this leaves a bullish backdrop for Ether’s price.
Other bearish strategies, including the short risk reversal and bear diagonal spread, are present in the market. The bullish sentiment overall appears to be winning out. As the expiry date approaches, the market will be watching closely to see how the bulls perform. Are they able to continue their push and power Ether above the key $2,700 level?
