Options Analysis: What are ETH Options Traders Expecting for 2025?
One benefit of analyzing options curves is we can see clearly what traders are positioning for, unlike in the spot market where we do not actually know how the traders are positioned. This is because for options they are tradable at future dates, including up to 26 December 2025 on Deribit.
Previously we have only analyzed the near term data for the options curve, so today we will look into what they are viewing for the rest of 2025.
At-the-Money (ATM) Volatility
Looking at the table and chart above, we can see ATM volatility is elevated for the 1-week tenor (7 February), and this is probably because of the tariff tensions from Trump. The volatility then falls until it reaches the low in April at 64.63% before picking up again going into the end of the year. Once we reach the September month, the volatility is goes to a new high (excluding the 7 February level), and this coincides with after the timing of the US crypto working group from Trump’s executive order to come back with the results (180 days from January).
Risk Reversals
Recap: The Risk Reversal is the 25-delta call volatility minus the 25-delta put volatility, and it shows which options are more expensive due to higher demand. If the figure is negative, it means puts are more valuable, so market participants view price as biased to the downside, and the reverse if it is positive, it means they view price is biased to go to the upside.
From the chart and table above, we can see that until end of February traders are actually more concerned with protecting downward moves in ETH, but going into March traders begin to have a much more positive view of ETH price. This shows that in the short term (within 1 month) traders expect ETH price to go down, but once we hit March and toward end of the year they expect ETH to rally again and prices to go up.
Butterfly
Recap: Butterfly shows how much higher the out-of-the-money 25-delta options are compared to the at-the-money options, which means the higher the number, traders expect bigger and sharper moves, and a smaller number means traders expect price action to move more smoothly.
Based on this metric we can see that traders expect much sharper moves in the near term, but beginning April onwards it doesn’t seem like they are expecting too many sharp and swift moves.
Final Thoughts
Despite all the concerns of the trade tensions that are happening right now, it seems traders do not view this to be a long term issue, with ATM volatility falling already at 21 February, while risk-reversals take abit longer to show a bullish trend, only starting at end March. Meanwhile the butterfly shows stabilization around 28 February. The combined analysis shows that this dip could continue until around end of the month, but the longer term trajectory for the year is still in an uptrend.
DISCLAIMER: Options data from Deribit