BTC, ETH Brace for $17B Options Expiration Amid Fed Meeting, Tech Company Earnings
Bitcoin and ether Options worth about $17 billion are set to expire Friday on Deribit in one of the largest monthly options expirations of the year.
There were 72,716 BTC Call Option Contracts and 54,945 BTC Put Option Contracts due for settlement, representing a combined notional open interest of nearly $14.4 billion.
Including Meeting Federal Reserve Now to set US interest rates and key tech company earnings scheduled this week, markets are bracing for a potential spike in volatility.
Options are derivative contracts that give investors the right, but not the obligation, to buy or sell an underlying asset at a predetermined price before a certain date. A put option acts as insurance against price decline and a call option gives the right to buy and represents a bullish bet on the underlying asset.
With 82.5% of open interest, out-of-the-money (OTM) options dominated traders’ holdings, showing a clear preference for speculative positioning. This indicates that while some traders may use OTM options as a hedge against sharp price moves, the overall positioning reflects an expectation of higher volatility and significant market swings.
Both calls and puts cluster excessively in the OTM region, with significant open interest around the strike prices of $120,000 and $130,000, while puts dominate at $100,000 and $110,000.
With Bitcoin trading near $113,000, the market is gravitating towards the pain level of max $114,000. That represents the price at which the greatest number of options contracts – both calls and puts – expire worthless, causing the least financial loss for option writers and the most for option holders.
As Bitcoin trades close to the max pain level, the price action sometimes gravitates towards expiration ahead due to the hedging activity of market makers, however this is just a theory.
Ether options show 375,225 ETH in call open interest and 262,850 ETH in put open interest, representing a notional total of $ 2.6 billion, with a max pain level at $ 4,110 compared to a current price of almost $ 4,000.
According to Checkonchain. That share has since declined to 44%, equivalent to Ibit’s market share.
