Cryptocurrencies

Important: Nearly $2 billion worth of options on Bitcoin and Ethereum expire today


Today, approximately $1.96 billion worth of options on Bitcoin and Ethereum will expire, which could cause a lot of tension in the crypto market.

Expiration of options can often lead to significant price volatility. That’s why traders and investors are keeping a close eye on today’s developments.

Banner Bitcoin 1

What are those options again?

Options on Bitcoin and Ethereum are contracts that give buyers the right, but not the obligation, to buy or sell Bitcoin or Ethereum at a certain price (strike price) before a certain date (expiration date).

Buyers of options pay a premium for this right. The premium depends on factors such as the current market price of the underlying assets, the strike price, the expiration date and the possible volatility.

What happens when these options expire?

What exactly happens to an option upon expiration depends on the type of option and the market price of the underlying asset:

Call option:

  • If the market price of Bitcoin or Ether is higher than the strike price at expiration, the option has value and the buyer can exercise it to purchase the asset at the lower strike price.
  • If the market price of the asset is lower than the strike price at expiration, the option loses all value and expires without value.

Put option:

  • If the market price of the asset is lower than the strike price at expiration, the option has value and the buyer can exercise it to sell the asset at the higher strike price.
  • If the market price of the asset is higher than the strike price at expiration, the option loses all value and expires without value.

Historical trends point to recovery

Today Bitcoin options expire with a face value of $1.27 billion. This means that there are 19,712 contracts that reach their end date today.

The put-to-call ratio of 0.46 indicates that there are more call options than put options. This suggests that there are more traders who expect the price of Bitcoin will rise (call options) than traders who expect the price to fall (put options).

Source: deribit

The “maximum pain point” of $66,500 is the price level that would cause the greatest financial losses for put option holders. This means that if the price of Bitcoin closes above that at expiration, put option holders will lose the maximum amount they invested in the options.

For Ethereum, there are 197,068 contracts with a nominal value of $693.37 million. These contracts have a put-to-call ratio of 0.30 and a maximum pain point of $3,500.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button