Bitcoin has rallied past $110,000, led by Optimism about the US-China trade relationship has changed. The bounce means BTC is now trading at levels where market makers could add price volatility ahead of Friday’s multi-billion dollar options expiration.
Data from the Deribit-listed options market, monitored by Amberdata and Deribit Metrics, shows that $13 billion in Bitcoin options—calls and puts—are set to expire on Friday. Interestingly, sellers and market makers hold negative gamma exposure at the $100,000 and $111,000 strike prices, which means they sell (write) more options than they buy at these levels.
In such scenarios, market makers hedge their positions by trading the market—buying as prices rise and selling as prices fall—to maintain net delta (market)-neutral exposure.
Their hedging activity typically intensifies as expiration approaches. That’s because gamma sensitivity increases as expiration nears, especially for at-the-money (ATM) or near-the-money options, such as those at the $110k and $111k strikes.
The chart shows the dealer gamma is mainly negative between $ 105,000 and $ 111,000, indicating a possibility of increased trading activity around these levels.
Beyond this range, gamma exposure turns positive at $114,000.
All told, Bitcoin’s next big move may come less from fundamentals than from mechanical hedging flows by options sellers.
