The positioning of ether options for May's end-of-month expiry shows investors have a lack of confidence in the chances for an imminent approval of a spot ether exchange-traded fund and anticipate significant price swings, an analyst said.

May 23 marks the 240-day window for the U.S. Securities and Exchange Commission to decide on a spot ether ETF proposal from VanEck. Following that, a decision on the ARK/21Shares filing is due by May 24 and a decision on Hashdex's proposal is expected by May 30.

In January, Bloomberg Intelligence analyst James Seyffart set the chances of a May approval at 60%, then dropped his expectations to 35%, but finally decided that the applications would ultimately be denied.

According to YouHodler Chief of Markets Ruslan Lienkha Lienkha, this growing doubt is playing out in derivatives markets.

"Ether options expiring at the end of May show us a significant volatility increase in the zone of the $3,600 strike price, so the possible surpassing of this price level by the spot market would be accompanied by elevated volatility. At the same time, the implied volatility curve could be adjusted by new facts or SEC rhetoric during the following month," Lienkha told The Block.

May expiry options not valued over those for April

Speaking to The Block, cryptocurrency derivatives trader Gordon Grant said that, over the past month, market participants have sold down April volatility in favor of May. He said this was evidenced by the upward-sloping term structure and compression in realized movements of the ETH -2.13% /USD price. 

Ether increased by a muted 0.36% in the past 24 hours and was changing hands for $3,532 at 7:59 a.m. ET, according to The Block's Price Page. 

The GM 30 Index, representing a selection of the top 30 cryptocurrencies, has increased by 0.19% to 148.05 in the past 24 hours.