Today, nearly $4.3 billion in Bitcoin (BTC) and Ethereum (ETH) options contracts are set to expire, a development that could influence short-term price movements.
While smaller than last week’s expiry, events like this often spark volatility. The timing coincides with growing optimism over a potential Federal Reserve rate cut next week.
Crypto Traders Eye $4.3 Billion Bitcoin and Ethereum Options Expiration
Recent data from Deribit highlights that Bitcoin options expiring today hold a notional value of $3.42 billion. The total open interest currently stands at 29,651 contracts, marking a slight decrease from last week’s 30,447 contracts. This dynamic can indicate shifting trader sentiment in the market.
Breaking it down, of these contracts, 12,819 are call contracts while 16,833 are put contracts. This creates a put-to-call ratio of 1.31, signaling a more robust demand for downside protection. Such a skew often reflects caution among traders, suggesting many are positioning themselves for potential short-term weakness in Bitcoin’s price.
Conversely, Ethereum traders are exhibiting slightly less bearish positioning. For Ethereum, the numbers tell a different story: there are 93,518 call contracts compared to 96,182 put contracts, resulting in a put-to-call ratio of 1.03. These combined 189,700 contracts carry a notional value of $858.2 million, representing a notable decline from last week’s 299,744 contracts.
Both Bitcoin and Ethereum are currently trading above their maximum pain levels. According to BeInCrypto Markets data, Bitcoin is valued at $115,617, exceeding its maximum pain price of $113,000. Similarly, Ethereum is trading at $4,553 against a maximum pain level of $4,400. The concept of maximum pain identifies the price point at which the greatest number of options contracts expire worthless, causing the steepest losses for traders.
The maximum pain theory is particularly interesting to market watchers because it often predicts where prices may drift as options near expiration. As the expiration date approaches, prices tend to gravitate toward this level, adding an extra layer of intrigue to market dynamics.
Additionally, attention now turns to the Federal Reserve’s upcoming rate decision. Optimism is palpable among traders, with forecasts suggesting a potential rally should policymakers confirm expectations of an interest rate cut.
Analysts at Greeks.live have noted that implied volatility remains relatively calm, even dipping slightly. They pointed out that the options market is pricing in a low future volatility environment, insinuating that a 25-basis-point rate cut is likely already priced into market expectations.
“The options market is pricing in relatively low future volatility, with a consensus that a 25-basis-point rate cut has already been factored in,” the analysts wrote.
Moreover, Greeks.live reported a significant uptick in block trade activity, which has constituted over half of the daily volume in the past two weeks. Their analysis of trade distribution revealed that most transactions are concentrated in the current month, showcasing a relatively balanced level of buying and selling. This suggests considerable divergence in market expectations for the latter half of this month, while forecasts for volatility remain generally subdued.
“This indicates considerable market divergence regarding the latter half of this month, though expectations for volatility remain generally subdued,” the post added.
The sentiment across the market appears broadly favorable for the fourth quarter, hinting that traders are cautiously optimistic as they navigate the complexities of the nearing options expiry in conjunction with macroeconomic indicators.