As the year draws to a close, a record-breaking expiry of bitcoin options is set to make waves in a market that appears heavily leveraged to the upside.
Key Highlights:
- This Friday, 146,000 bitcoin options contracts worth nearly $14 billion are due to expire on Deribit.
- The options account for 44% of the total open interest for all BTC options, marking the largest expiry event in the platform's history.
- Options valued at $4 billion are predicted to expire in-the-money.
Options trading gives buyers the right to purchase or sell an asset at a predetermined price. A call option allows the buyer to buy, while a put option permits selling.
The significant expiry will take place this Friday at 8:00 UTC, culminating in a notional amount that comprises a remarkable portion of the BTC options market.
Simranjeet Singh from GSR anticipates a good deal of open interest in BTC and ETH being rolled into the January and March expiries.
The current put-call open interest ratio is 0.69: for every seven puts, there are ten calls. This indicates a relatively bullish tilt among traders despite recent bearish sentiments stemming from the Fed's latest decisions.
Luuk Strijers, the CEO of Deribit, emphasized that the current market conditions heighten the risk of a swift downturn.
Andrew Melville noted that comparison of the implied volatility for BTC and ETH suggests a bearish sentiment towards ETH relative to BTC, reflecting a more cautious outlook as the expiry date approaches.
The volatility of the market is expected to ramp up further as traders react to the impending expiry, making all eyes turn to this event as it may shape the trading narrative into the new year.
