<

Bitcoin Options Expiring on Feb. 23 Could Shake Up the Market

The Bitcoin (BTC) market could see some volatility in the coming days, as a massive amount of options contracts worth $3.7 billion are set to expire on Friday, Feb. 23, according to data from Deribit, the leading cryptocurrency options exchange.

Options are contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price and time. They are often used by traders to hedge their positions, speculate on price movements, or take advantage of arbitrage opportunities.

According to Deribit, there are 71,340 BTC options contracts expiring on Friday, with a total open interest of $3.7 billion. Open interest is the total value of the contracts that have not been settled or closed. It indicates the level of activity and liquidity in the market.

Open Interest by Strike Price | Source: Deribit

The majority of the options contracts are call options, which give the buyer the right to buy BTC at a certain price. There are 46,300 call options expiring on Friday, with a total open interest of $2.4 billion. The put/call ratio, which measures the proportion of put options to call options, is 0.76, meaning there are 76 put options for every 100 call options. This ratio suggests that the market sentiment is bullish, as more traders are betting on BTC to rise than to fall.

The most popular strike price for the call options is $60,000, with 9,800 contracts expiring on Friday, followed by $53,000, with 8,900 contracts. These strike prices are above the current BTC price, which is around $51,000 at the time of writing. This means that these options are out of the money, meaning they have no intrinsic value. However, they could become in the money, meaning they have intrinsic value, if BTC surges above these levels before the expiration date.

The ‘max pain point’ for the BTC options expiring on Friday is $47,000, according to Deribit. This is the price at which the most number of options contracts would expire worthless, causing the maximum loss for the buyers and the minimum payout for the sellers. The max pain point is often used as an indicator of where the market is likely to move, as the sellers may try to push the price towards this level to minimize their losses.

However, the current BTC price is above the max pain point, indicating that the market is more bullish than the options market setup. If the price remains above $51,000, the put/call ratio could decrease, as more traders may opt for more call options, expecting further bullish trends. This could create a positive feedback loop, as the rising demand for call options could push the price higher, making more options in the money and increasing the buying pressure.

On the other hand, if the price drops below $47,000, the put/call ratio could increase, as more traders may opt for more put options, expecting further bearish trends. This could create a negative feedback loop, as the rising demand for put options could push the price lower, making more options in the money and increasing the selling pressure.

Therefore, the BTC options expiring on Friday could have a significant impact on the market, creating volatility and uncertainty. Traders should be prepared for any possible scenario and adjust their strategies accordingly.

Read more:

Join us on Telegram

Follow us on Twitter

Follow us on Facebook

Follow us on Reddit

You might also like