Friday is Bitcoin options expiration day, and a huge tranche of contracts is set to expire today. Crypto markets are enjoying a rare positive day, but will the big run-out have an impact?
On September 29th, around 118,000 Bitcoin options contracts with a notional value of a whopping $3.2 billion will expire. The month-end expiration is usually a big event, and September will dwarf the expiration events of previous weeks.
Expiry of major Bitcoin options
The maximum pain point for today’s large amount of expiring Bitcoin options contracts is $26,500. This is now lower than the spot BTC price, which surpassed $27,000 a few hours ago.
The price level with the most open contracts is the maximum pain and it is also the level at which the most losses occur when the contracts expire.
The put/call ratio is 0.58, meaning almost two-thirds of the contracts expiring today are calls (longs).
Greeks Live noted that it was a quarterly delivery, adding that this year’s quarter was just as flat as previous years. Additionally, the third quarter is generally the period with the least activity, and “the position share of puts is significantly lower compared to weekly deliveries.”
“Liquidity has continued to deteriorate recently, with large position moves being the main driver of trading this week. With delivery imminent, IV continues its downward trend.”
IV is the implied volatility, which measures the expected future volatility arising from the expiring derivative contracts. The downtrend suggests that market consolidation and low volumes are likely to continue for a while.
Bitcoin Options OI. Source: X/@GreeksLive
Big day for ETH contracts
In addition to Bitcoin options, 1.1 million Ethereum contracts also expire today.
These have a notional value of $1.8 billion and a maximum pain point of $1,650, which is exactly where ETH is trading at at the time of writing. The put/call ratio for the Ethereum contracts is 0.46.
Ethereum Options OI. Source: X/@GreeksLive
Crypto markets are experiencing a rare day in the green, with total capitalization rising 2% on the day to $1.11 trillion.
BTC crossed $27,000 in late trading on Thursday, but has already cooled down and fallen back to $26,958.
Meanwhile, Ethereum gained 2.8% on the day to reach $1,651. ETH’s momentum may have been driven by the premise that the first futures ETFs will launch in the US next week.
Disclaimer
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