Call options are dominating ether open interest as investors position themselves for a potential increase in institutional demand from spot ETH -1.75% exchange-traded funds , analysts noted.

Ether spot ETFs were approved by the U.S. Securities and Exchange Commission last Thursday — but, unlike bitcoin ETFs, which started trading the day after approval, the ether ETFs may not go live for a few weeks or months.

In light of the recent approvals, QCP Capital analysts expressed a positive structural outlook for ether — noting that the largest increases in ether options open interest over the past 24 hours were primarily in calls.

This observation aligns with data from the Deribit derivatives exchange, which shows the ether put-call ratio for all expirations is now at 0.56. A put-call options ratio below one indicates that the call volume exceeds the put volume, signifying bullish sentiment in the market.

Elevated ether call option implied volatility 

The analysts added that implied volatility for near-term ether calls is higher than that for put options — a situation that indicates the market is anticipating upward price movement or greater demand for call options relative to put options.

"Ether frontend vols could remain 15-20 vols above bitcoin, and ether skew is likely to remain in favor of calls," QCP Capital analysts added.

However, the QCP Capital report said that a potential breakout for the ether price will have to wait until there is more clarity on the S-1 approvals.

The Block's Data Dashboard shows ether IV spiked last week amid the SEC's decision to approve eight spot ether ETFs. Since then, IV has decreased slightly but is still elevated compared to that for bitcoin.

IV is a measure used in the options market to estimate the market's forecast of a likely movement in an asset's price. Higher IV indicates that the market expects significant price movements (higher uncertainty or risk), while lower IV suggests more stability.

Options are financial derivatives that give the holder the right, but not the obligation, to buy or sell an asset (in this case, ether or bitcoin) at a predetermined price before a specified date.

Ether's price increased by a muted 0.5% in the past 24 hours and was changing hands for $3,922 at 6:24 a.m. ET, according to The Block’s Price Page.

The GM 30 Index, representing a selection of the top 30 cryptocurrencies, increased by 0.43% to 146.98 in the same period.