The monthly expiration of $1.9B in Ethereum futures and options will determine if ETH reaches $3K anytime near.

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Ethereum bulls may have returned to support at $2,400, but Friday’s ETH options and futures expiry will determine if traders press the pedal towards $3,000.

The May 28 futures and options expiry might be a watershed moment for Ether (ETH), which has recovered 60% from its $1,730 low on May 23. Despite the $6.2 billion in open interest, just 16% of it is slated to expire on Friday, since the majority of the action is on perpetual and June contracts.

The expiration of options must be considered since it may result in a force imbalance. This is not true for futures markets, where longs (buyers) and shorts (sellers) are always matched.

Options are classified into two categories: call (buy) options, which are most usually used for neutral-to-bullish strategies, and put (sell) options, which are used for neutral-to-bearish strategies.

As a result, whereas Ether futures longs and shorts are always matched, options markets offer a clear picture of which side has the edge.

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Ether price at Coinbase, USD. Source: TradingView

Ether’s futures open interest was drastically reduced after the correction

The steady decrease that began after the all-time high of $4,380 on May 12 lasted eleven days, and the price ultimately bottomed out at $1,730. The low pricing, however, did not persist long, as Ether swiftly reestablished support near $2,400. Futures open interest fell by 54% to $5.2 billion as leveraged longs were liquidated and short-sellers profited.

In terms of the $980 million in Ether futures expiring on Friday, Huobi exchange leads with $300 million in open interest. CME carefully watches it; however, CME traders often roll over the majority of holdings in the last few of trading days, so this amount may be considerably decreased as we near the deadline.

 

Ether May 28 futures open interest. Source: Huobi, CME, OKEx, Deribit, BitMEX

At first glance, options favor neutral-to-bullish call options

There are 189,000 call (buy) Ether options stacked against 153,900 put (sell) options for the May 28 expiration. According to this first research, neutral-to-bullish calls have a 23 percent advantage. However, one must consider that the ability to acquire Ether for $3,200 or more in less than 16 hours isn’t that appealing right now.

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The same may be true for the ultra-bearish put options priced at $2,300 or less. To properly assess the possible pressure from Friday’s expiration, one must rule out both extremes.

Take note of how $3,000 is a critical milestone for bulls, with 30,700 call options packed there vs 15,000 put options. This indicates that if bears can hold Ether’s price below that level, the neutral-to-bullish call options total 54,500 ETH, or $150 million.

Meanwhile, the total open interest in neutral-to-bearish put options at $3,000 and above is 52,700 ETH, or $145 million. As a result of the options expiry, there is a balanced force.

 

Bulls have little incentives to push the price above $3,000

If the bulls decide to show their might and push the price beyond $3,000, the difference will be 45,700 ETH contracts worth $125 million. Even if it is large, it is unlikely to be enough to raise the price.

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Futures traders were pessimistic following the recent massive liquidations published by Cointelegraph on May 24. Concerning options, call and put pressures appear balanced at the moment and should provide no surprises on Friday.

The Huobi, OKEx, and Deribit exchanges will expire on May 28 at 8:00 a.m. UTC. CME futures and options trade at 3:00 PM UTC, a bit later in the day.

 

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