How $1.35 billion options expiration will affect#BTC+0.24%#Ethereum+1.40%
Lots of Bitcoin options expiring today
BTCUSD and Ethereum ETHUSD. Let's figure out how this will affect the price of underlying assets
Cryptocurrency options are derivative contracts that allow traders to buy or sell an asset at a specific price on a specific expiration date. If the option owner decides not to buy or sell cryptocurrency, he is not obligated to do so. This makes options a more flexible instrument than futures, which require you to close a position regardless of profit or loss.
$BTC The notional value of the soon-expiring 20,000 BTC contracts and 200,000 ETH contracts is $1.35 billion and $710 million, respectively. We are looking into whether expiration can provoke increased volatility in the market and affect the price of the two largest cryptocurrencies by capitalization.
Where to trade cryptocurrency options: top 6 options.
$BTC The options market is calm
According to Greeks.live, the BTC put to call ratio remains at 0.49. This means that the number of calls, or long contracts, exceeds the number of puts, or short contracts. The maximum pain point - that is, the price at which the asset will cause financial losses to the largest number of holders - is located at $68,500, which is quite close to the current price.
#BTC The put/call ratio on Ethereum, meanwhile, is 0.36, with the maximum pain point at $3,600.
However, Greeks.live analysts note that the current calm in the market is unlikely to last long.
#BTC “Recently, there have been fewer hot spots in the market, and the market is relatively calm. There should be news about the approval of the ETH ETF by the end of this month, so now is the time to plan ahead for call options for next month,” they comment.
What will happen to the BTC price during expiration?
#BTC Bitcoin has demonstrated impressive volatility this week: amid the release of important macroeconomic data, the price of the main cryptocurrency dropped from $71,600 to $66,250. At the time of writing, BTC is trading at $67,030, having lost 0.5% over the last 24 hours . Ethereum, meanwhile, lost important support and fell below $3,500 despite the positive news.
#BTC It is quite difficult to predict how the market will behave on the expiration day of a large number of contracts - especially if any events are added to it that affect the news background. However, traders need to closely monitor the situation to ensure that increased volatility does not lead to unwanted triggering of stop loss orders or poor trading decisions.$BTC
#BTC We should not forget that the impact of option expiration on the price of the underlying asset is short-term in nature. As a rule, the very next day the market will return to its normal state, and strong price deviations will be compensated.
