Ether option traders are positioning for heightened price volatility surrounding the SEC’s end-of-May deadline for spot ether ETF decisions.
The second-largest digital asset by market cap experienced a slight decline in the past 24 hours, according to The Block’s Price Page.

Ether options traders are gearing up for end-of-month volatility due to the strong possibility that the U.S. Securities and Exchange Commission (SEC) will not approve two spot ether ETF filings.

The SEC has deadlines on May 23 and May 24 to decide whether to approve the applications for spot ether ETFs submitted by VanEck and ArkInvest/21 Shares, respectively.

According to Wintermute OTC Trader Jake Ostrovskis, the market currently assigns just a 16% chance of these ETFs being approved by the end of May. Ostrovskis added that ether options implied volatility will likely rise towards the end of the month, especially around the time when the SEC is expected to make decisions regarding spot ether ETFs.

"There is a slight kink in ether's implied volatility term structure. Pricing for May 31 sits around 60%, before the market flattens then rises again from June into year-end. This represents an 8 point premium to bitcoins volatility pricing, which holds around 52% at the same tenor," Ostrovskis told The Block.

Ether as security or commodity uncertainty

Although most indicators suggest that approval is unlikely, investors will closely examine the reasons cited by the SEC for the denial to glean insights into the potential for future approvals. Additionally, they will seek clues regarding whether ether will eventually be classified as a security or a commodity.

"Analysts have noticed a hint in one of the SEC’s documents suggesting possible grounds for potential denial – specifically, filing the vehicles as a commodity trust was improper as ether may turn out to be a security. This adds to the view that the SEC had already made its decision long ago and is now engaging in post hoc rationalization to justify it," Presto Research analysts Peter Chung and Min Jung said in an email sent to The Block.

Ether's price fell 0.3% in the past 24 hours and was trading at $2,904 at 5:04 a.m. ET, according The Block’s Price Page.

The GM 30 Index, representing a selection of the top 30 cryptocurrencies, fell 1.02% to 126.92 in the same period.

The price of ether fell 0.3% in the past 24 hours. Image: The Block.

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