More than $10 billion worth of Bitcoin (BTC) and Ethereum (ETH) options are set to expire today.
Market watchers pay particular attention to this event because it has the potential to influence short-term trends through the number of contracts and their notional value. Examining the put/call ratio and the biggest pain point can provide insight into traders' expectations and possible market direction.
Bitcoin and Ethereum options expire today
The notional value of BTC options expiring today is $9.47 billion. According to Deribit data, the put/call ratio for these 98,309 expiring Bitcoin options is 0.84. The ratio indicates that buying options (calls) is more prevalent than selling options (puts).
The data also shows that the biggest pain point for these expiring options is $80,000. In crypto options trading, the biggest pain point is the price at which most contracts expire worthless. This is where the asset will result in the most financial losses for holders.
In addition to Bitcoin options, there are 412,116 Ethereum options contracts expiring today. These expiring options have a notional value of $1.47 billion and a put/call ratio of 0.75. The highest pain point is $2,900.
The current market prices of both Bitcoin and Ethereum are above their respective maximum pain points. BTC is trading at $96,353, while ETH is trading at $3,573. This means that if options expire at these levels, it usually means that option holders will suffer losses.
Options traders' results can vary widely depending on the specific strike prices and positions they hold. To accurately assess potential gains or losses at expiration, traders must consider their entire options position as well as current market conditions.
Insights on Today’s BTC and ETH Options Expiring
Analysts at options trading tool provider Greeks.live revealed an interesting investor perspective, suggesting that a thorough assessment is crucial before drawing conclusions.
"BTC price has pulled back 11% and people are saying the market rally is about to end. Less than 10 days ago, the same people were calling for a pullback to buy," they wrote.
Jeff Liang, CEO and co-founder of Greeks.live, expressed optimism, saying he was prepared to hold until the options expire at 8:00 UTC on Friday.
"Although the spread is large, the quoted implied volatility is comparable to the historical volatility in the last one month, so the price is not too high. A 5% increase in the spot price can offset the spread. I plan to hold until expiration. I bought a batch of call options last night and the market has already seen some volatility this morning," Liang said.
Meanwhile, the cryptocurrency market remains subtly optimistic. Bybit said in a statement shared with BeInCrypto that the optimism could be attributed to hopeful investors anticipating a more crypto-friendly SEC chairman following the resignation of Gary Gensler.
In this context, Bybit also commented on the current market outlook, noting that the correction in Bitcoin prices and the expiration of ETH options indicate a moderation in bullish sentiment.
“BTC’s pullback from the $100,000 mark has caused the ATM volatility term structure to flatten, with short-dated options falling below 60%. This mirrors a pattern observed since the US election. Lower realized volatility explains the drop. While call and put open interest remained unchanged, demand for short-dated options stagnated this week. ETH options show slightly more bullish sentiment than BTC options. The market is recalibrating after post-election highs, but call options still lead in terms of volume and open interest,” Bybit added.
ATM IV refers to the implied volatility of an options contract with a strike price equal to the current market price of the underlying asset. Analysts and traders often use this specific type of IV (implied volatility) to gauge market sentiment and expectations of volatility for the underlying security.
Therefore, traders are advised to be cautious as historically, option expiration has tended to cause short-term instability in the market. Weekends are also crucial as they are usually associated with high volatility due to low trading volumes.
