Ethereum's $1.5B options expiry on June 25 will be a make-or-break moment

Bulls and bears are equally nervous about the possible outcome of the June 25 $1.5 billion Ethereum options expiry. On June 25, Ether (ETH) will face its largest options expiry in 2021 as $1.5 billion worth of open interest will be settled. This figure is 30% larger than March's 26 expiry, which took place as Ether price plunged 17% in 5 days and bottomed near $1,550. 

However, Ether rallied 56% after March's options expiry, reaching $2,500 within three weeks. These moves were completely uncorrelated to Bitcoin's (BTC). Therefore, it is essential to understand if a similar market structure could be underway for June 25 futures and options expiry.

Recent history shows a mix of bullish and bearish catalysts 

On March 11, Ether miners organized a "show of force" against EIP-1559, which would significantly reduce their revenues. The situation worsened on March 22, as CoinMetrics launched an "Ethereum Gas Report," stating that the highly anticipated EIP-1559 network upgrade would unlikely solve the high gas problem.

Things started to change on March 29, as Visa announced plans to use the Ethereum blockchain to settle a transaction made in fiat, and on April 15, the Berlin upgrade was successfully implemented. According to Cointelegraph, after Berlin launched, "the average gas fee began to decline to more manageable levels."

Before jumping to conclusions and speculating whether these phenomena of the Ether price bottoming near the upcoming $1.5 billion options expiry are bullish or bearish, it's best first to analyze how large traders are positioned. Take notice of how June's expiry holds over 638,000 ETH options contracts, totaling 45% of the aggregate $3.4 billion open interest.

Unlike futures contracts, options are divided into two segments. Call (buy) options allow the buyer to acquire Ether at a fixed price on the expiry date. Generally speaking, these are used on neutral arbitrage trades or bullish strategies. Meanwhile, the put (sell) options are commonly used to hedge or protect from negative price swings.

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

As displayed above, there's a disproportionate amount of call options at $2,200 and higher strikes. This means that if Ether's price on June 25 happens to be below this level, 73% of the neutral-to-bullish options will be worthless. The 95,000 call options still in play would represent a $228 million open interest.

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

It seems premature to call who might be the winner of this race, but considering Ether's current $2,400 price, it looks like both sides are reasonably comfortable. However, traders should keep a close eye on this event, especially considering the price impact that surrounded the March expiry.