As the U.S. prepares to launch exchange-traded funds (ETF) anchored to ether’s (ETH) spot price, investors are flocking to the options market to hedge their positions against price volatility.

Data from Deribit and Kaiko indicates a rise in implied volatility (IV)—market expectations of price fluctuations derived from options—across various timeframes. This uptick signals heightened demand for options or derivatives to safeguard against market swings. Call options protect against price surges, while put options offer security against declines.

The hedging activity is notably more intense in short-term contracts. This is evident from the recent premium in IV for options expiring on July 19 compared to those maturing on July 26. Kaiko reports that IV for the July 19 expiry jumped from 53% on Saturday to 62% on Monday, surpassing the IV for July 26.

Read more: Securities and Exchange Commission Greenlights ETH ETFs for Trading

“The increased IV for the July 19 contracts suggests traders are willing to pay more to hedge existing positions and guard against sharp price moves in the near term. This spike indicates a degree of uncertainty among traders,” Kaiko analysts noted in Monday’s newsletter.

Traders also foresee greater volatility in ether compared to bitcoin. Amberdata shows the spread between Deribit’s 30-day ether and bitcoin implied volatility indices (BTC DVOL and ETH DVOL) has averaged around 10% since late May, up from 5% in the first quarter.

Bybit and analytics firm BlockScholes echoed these observations in a report shared with CoinDesk on Monday.

“Key findings indicate rising investor optimism for ETH, especially with the imminent launch of the first Ether Spot ETFs in the United States. This sentiment is reflected in ETH’s sustained volatility premium over BTC amid heightened market activity,” the report stated.

The surge in ether hedging activity aligns with bullish expectations for the spot ether ETFs, set to start trading next Tuesday. Gemini predicts these ETFs could attract $5 billion in net inflows within the first six months, enhancing ether’s market value relative to bitcoin.

Moreover, traders, aware of the “sell-the-fact” phenomenon that followed the bitcoin ETFs’ debut on January 11, might be bracing for similar volatility in ether.

However, traders should note that the current market sentiment and ether’s bullish positioning are more tempered compared to bitcoin in early January, indicating a lower likelihood of a post-debut “sell-the-fact” dip.