Markets
$1.8 Billion in Bitcoin, Ethereum Options Expire as Market Watches
Around $1.79 billion in Bitcoin (BTC) and Ethereum (ETH) options are set to expire today, bringing the expected market volatility.
Traders are closely watching this event, especially in light of the upcoming launch of spot Ethereum exchange-traded funds (ETFs).
Traders Expect Volatility to Increase as Options Expire, Ethereum ETF Buzz
According to Deribit data, 20,679 Bitcoin contracts, worth approximately $1.31 billion, are set to expire today. This tranche is slightly lower than last week’s figureswhich were 23,832 contracts. These expiring contracts have a put-to-call ratio of 1.19, with a maximum pain point of $62,000.
To know more: Introduction to Crypto Options Trading
Bitcoin options expiring. Source: Deribit
The pain point in the crypto options market is the price level that inflicts the most financial pain on option holders. Meanwhile, the put-to-call ratio suggests a prevalence of call options over put options.
In addition to Bitcoin options, 142,583 Ethereum contracts will expire today, with a notional value of over $483.84 million. The put-to-call ratio is 0.37, with a maximum pain point of $3,150.
Deribit analysts offered insights into the options market this week. They noted that Kraken Note to Reimburse Mt Gox Creditors appears to have prompted one fund to move its December call options from 85,000 to an August straddle from 65,000 to play gamma in both directions.
Gamma in crypto options trading refers to the rate of change in an option’s delta in proportion to a $1.00 price movement in the underlying asset. It represents the amount of risk exposure to the price of an option position.
“Spot after the first sale at 63,000, strengthened and forced to cover short the Call, Delta and [implied volatility] IV. It cannot be a coincidence that $4.5 million was released from a sale of 85,000 calls in December, and that same amount was invested in the $65,000 straddle in August,” they said. he wrote.
They also highlighted similar transactions, including the purchase of 70,000 August calls funded by 90,000 December calls.
“This influx of premiums was a combination of underperformance [fear of missing out] FOMO, short covering and new exposure after The Germain government’s coins are finished and the market rose well beyond expectations, surpassing $66,000,” Deribit added.
Furthermore, Deribit stressed that Ethereum ETF spot trading indication on July 23 spurred a strong rally for ETH. However, the spread between BTC and ETH narrowed from 15% to 8%.
Market analysts have noticed a trend since last week. A joint relationship of BlockScholes and Bybit noted that as of last week, the preview of these ETFs may have influenced the behavior of ETH derivatives, making it different from that of BTC. Additionally, BlockScholes’ Senti-Meter Index, which measures investors’ risk preferences based on fund rates, returns, and volatility, indicates that investors have a more positive outlook on ETH than BTC.
To know more: Top 9 Crypto Options Trading Platforms
Historically, options expiration tends to cause sharp temporary price movements. The market usually stabilizes shortly thereafter. However, traders should continue to be careful in analyzing technical indicators and market sentiment to effectively manage potential volatility.
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